Shaanxi Province Rural Economic Growth And Financial Development

With the further development of the west and the full swing of the new rural construction, the rural economy in Shaanxi Province is meeting an unprecedented opportunity for its development. As the core of modern economy, finance occupies an important position in the allocation of resources in the rural market economy. But for now, rural economy in Shaanxi is still not growing fast enough, and the development of rural finance is also far from meeting the needs of the rural economic development.Based on these above, the research choses the financial support in rural areas for the study. The study baises on the economic growth theory, finance development theory and rural financial theory.At first, the article describes and analyses the situation of economic development in rural areas in Shaanxi, and analysese the current rural finance status from the aspect of supply and demand.Second, the study makes the empirical model using VAR analysis by selecting the entire rural areas in Shaanxi province and chosing 1986-2008 economic and financial data. It studies on the relationship between Shaanxi Province Rural Economic Growth and Financial Development by using Granger causality test, impulse response and variance decomposition, in order to analyse the role of rural finance in rural economic development.The conclusions show that:the level of rural economic development in Shaanxi Province is backward, and the level of financial development is much lower that can not meet the demand for capital of rural economic development.Then the financial repression is a common practice, and agricultural loans can not really help the economic development in rural areas and not play its due role in promoting. Finally, the article makes recommendations to promote rural economic growth by the financial support which have three aspects.Those are improving the rural financial system and financial markets,as well as optimising the external environment of rural finance.