Rural Financial Development And Economic Growth Relationship Study

Finance crisis happened from a few developed countries and then almost whole world influenced by it, we can see the problem of financial system seriously effect many country's economic, the scale of economic and the rate of growth fall down. There is a close relationship between Finance and economic, and the relationship of rural economic and finance is close also. We have a big rural population, the rural economy is important for whole country. Since reform and opening-up of thirty years, China's change is quick and everyday is different, After our country enter the WTO, under the serious competition, the economic reform accelerate and our country's economic growth speed up, but the distance between the economic level of city and rural district is broadening. The capital supply is the crucial reason in the finance of rural district, the development of rural finance is slow than city and is not advanced. Financial repression is serious in the rural district. The rural banks reform to commercial banks, for profit the rural banks are more likely to use their capital in the place ,like cities, where they can gain more earnings, so the farmers put their money in the banks but then the banks don't like supply credit to farmers or agriculture. The rural capital flow to cities. The rural finance doesn't support its economy well. It is useful to do research on the relationshiop of ruoral economy and finance, find how the relatiuonship like and what the way the rural finanece support the economy. Hope the research can help the rural finance systemes to improve and finanly stimulate the rural economy.Firstly, The paper tells the rural finance reform since our country opening-up till now, the rural finance policy and banks functions change a lot. Next , paper states the composition of the rural finance system, regular finance and private financial. Then paper analyse how the rural economy and fiannce effect each other. We explain the relationship of the two base on the economic theory and models. we choose proper index of finance and econmomic to do empirical ananlyses, use Johanseoen Cointegration Test and the Granger Caue sality to find how is the relationship. Finanly, based on exe sisting problemss ad empirical analysies , search the reason that rural finance does not develop well, the paper finanly make detailed and effective suggestion to improve internal and external environment of rural finance.