The Empirical Analysis Of Relationship Between The Financial Development And The Income Distribution Gap In Central Region

Financial development refers to the appearance of different types of financial institutions and financial instruments in the economy.As time passby,the development of financial institutions and financial instruments with different speed and structure have a great influence in every economic department.This difference will affect not only economic growth,but also the people's income. After more than 30 years'reform and opening-up, our finance industry has made a great progress,meanwhile economy has also been growing with high speed.As the People's income has risen to a high level,their living standards have been generally improved greatly,but the national income gap becomes wider. It is not beneficial to establishing harmonious society and to sustaining a healthy development of the national economy. More and more researchers and economists studied the topic of Income distribution, poverty, inequality ,which has become a focus concerned by society. Since 1990,analysis the income distribution from the view of Financial development, building a dynamic model to eatimat the relationship of financial development,economic growth and Income distribution, first has been made by Greenwood and Jovanovic.They find that the relationship between financial development and income distribution obey the reverse"U",which means financial development will broaden national income gap at the beginning of economic growth,then the gap will narrow down at the mature period of economic growth.From then on, many economists home and abroad began to do lots of theoretical and empirical researches on the relationship between financial development and income distribution,but they didn't reach an agreement on final conclusion.Chinese Economists mainly made empirical study of the relationship financial development and income inequality, most of them are based on a nation or a province ,very few focus on region to study. In fact, the financial development of every region,province, even city is different.After the strategy of rise of Central China having been proposed, it becomes a hot spot area with new round of economic growth and economic reform in China.That is the reason why this paper choses six provinces in central to study the relationship between financial development and urban-rural income inequality. Based on empirical research by economists before,using from 1978 to 2009 data of six provinces in central, this thesis sets FIR,FE index to explain the scale and efficiency of financial development,establiishes CR index explain the income gap in urban-rural,then makes Unit Root tests, Johansen co-integration tests and Granger test of causality to analyze the relationship from long-run between financial development and urban-rural people's income distribution gap in central of China.Thus, it will provide policy guidelines of scientific development in central china, to the benefit of realizing the strategy of rise of Central China.Based on the result of empirical studies, there exists the long-run equilibrium relationship between financial development and income distribution gap.Financial development narrow this income gap evidently.Then, we put forward some proposes on macroscopic finance policy and income distribution policy.