The Influence On The Financial Development Of Jilin Province To The Income Distribution Of Urban And Rural Residents

Since the1978reform and opening up, China's economical and social situationhave change a lot, and it is also greatly improved of people's living standards. JilinProvince, northeast gold Corn Belt, per capita GDP of381Yuan from the beginningof the reform increased to31,599Yuan in2010, is83times the beginning of thereform, and the annual growth rate is maintained at about14%. Although people'sliving standard of Jilin Province has been greatly improved, the problem ofurban-rural income gap arises. Until2010the Engel's coefficient in the town of JilinProvince was32.3%, and rural Engel coefficient was36.73%, with a difference ofnearly5percentage points between them. Many factors affect the income distributionin Jilin Province, especially for the financial development. This paper will test thecorrelation of this factor and the income distribution, in order to give suggestions.This paper from the perspective of financial development discusses theurban-rural income gap in Jilin Province, and reviews the theory of financialdevelopment, development theory of rural finance. We summarize previous researchpoint of view and find that the income gap is divided into three categories: the theoryof "inverted U", the theory of expanding, and the theory of reduce. In theory, financialdevelopment points the increase pf the number of financial institutions, the expansionof the diversification of financial instruments and financial assets. The financialdevelopment through the effect of financial threshold, finance to reduce poverty, andthe lack of balance of financial development affect the income gap between urban andrural residents. Practice has proved that the improvement of the financial marketsystem, the transparency of financial information, the diversification of financialinstruments, and the balance of financial assets allocation in a country or region caneffectively reduce the income gap between urban and rural residents.On the basis of theoretical analysis, we describe the status of the financial development and income distribution in Jilin Province. By lateral, internal, verticalcomparison we identify the factors that affect financial development, and expansionof the urban-rural income gap in Jilin Province. Finally we sum up the effect ofduality of the financial development through financial institutions, financial andcredit allocation of resources, and differences between insurance and capital marketsto the urban-rural income gap in Jilin Province. The empirical part builds a VARmodel using data from1978to2010in Jilin Province. And the paper discusses theurban-rural income distribution disparity from two aspects of finance and ruralfinance system by the ADF test, cointegration test, Granger causality test, pulse effectanalysis, and variance decomposition. The empirical results show that: overallfinancial development scale, the scale of rural financial development and theurban-rural income gap in Jilin Province present positive correlation and bidirectionalGranger cause; financial efficiency and urban-rural income gap is negativelycorrelated, there is also unidirectional Granger causality; financial structure,agriculture fiscal policy and the urban-rural income are negatively correlated.By theoretical analysis, the current situation description and empirical analysis,the end of this paper from the financial development perspective gives some policyrecommendations to reduce the gap of urban and rural income distribution in JilinProvince, mainly summarized as lowering financial threshold in rural areas,improving the financial non-balanced development, to enrich rural financialinstruments and increasing financial support.