The Empirical Analysis On The Effect Of The Rural Financial Development Impact On The Urban-rural Income Gap

In the current rapid economic development and building a harmonious society, the most important issue of our country is sustaining economic growth, narrowing the urban-rural income gap and solving the three dimensional issue. The Central Economic Working Conference focused on the problem of balancing urban and rural development, and proposed to speed up the pace of the rural financial reform. So how to connect the balance of urban-rural development with the rural development become the research emphasis.In this research, most of the scholars studied from the macro perspective of the national financial development, and very few study from the rural financial perspective. So, this article choice the point of rural own development to discuss the effect of the rural financial development impact on the urban-rural income gap, probe into the way of rural financial reform to achieve the purpose of the China rural economy sustained growth and narrowing the urban-rural income gap.First of all, this paper defines the financial development and the rural financial development, designs the corresponding indicator with the characteristics of rural financial development which used to measure the rural financial development's size ,efficiency and structure, and make the statistic analysis on the present situation of rural financial development. Meanwhile, this paper get the urban-rural income gap from the real income and analyse the gap tendency. Subsequently, it discuss three ways which the rural financial development impact on the urban-rural income gap, namely, the urban-rural non-equilibrium effect, the rural financial resource allocation efficiency and the poverty reduction of informal financial effect. Then, there is a empirical analysis in the long-run equilibrium relationship and short-term fluctuated relationship between the rural financial development and the urban-rural income gap based on the VAR model, makes Grange causality test to know the causality relationship between variables, observe the dynamics relationship between the urban-rural income gap and the size, efficiency, informal structure of rural financial by the impulse response analysis and the variance decomposition analysis. It draw a conclusion: the expansive relative size of rural financial development widen the urban-rural income gap; the increase of rural financial institution allocation efficiency and the expansive of informal financial institution narrow the income gap. Finally, based on the result of the empirical analysis, it makes the recommendations to China's rural financial and economic policy.