An Empirical Study On The Influence Of Financial Support To Rural Economic Growth

"Twelve Five-Year " plan proposed the central task of China’s agricultural and ruraldevelopment is to promote strategic restructuring of the rural economy. Whether it isthrough the transfer of rural surplus labor force of urbanization, or through adjustment ofagricultural production structure, we need to have a lot of money into the accumulation andinvestment. All of these inseparable from the financial support. But from the currentsituation, most of financial institutions capital flow to relatively high non-agriculturalsectors, so that the role of financial support in promoting rural economic growth has notbeen played, rural economic development has been seriously constrained.Firstly, the paper analyzes the transmission mechanism of financial support to agriculturerural finance,and found out the rural credit is very important to rural economic growth.After collecting the data,by using principal component factor analysis to reduce thedimensionality of the data, extracting of three principal components, which mainly coveringthe scope and efficiency factors and economic growth factors. Through calculating of threeprincipal components factor score, construction a vector matrix consists of three principalcomponents, which used for analysising of financial support to agriculture and ruraleconomic growth.Secondly, by transforming of the matrix vector to construct VAR model,which used toempirical analysis of the financial support for agriculture in rural economic growth.Experimental studies show that: there existing long-term stability relationship between othe scale facror and efficiency factors with rural economic growth. The cointegration testshow that the scale factor play a more important role in financial support to agriculture thanthe efficiency factor; Granger causality test showed that the two factors are the Grangercauses of economic growth, however, the rural economic growth is not the Granger causesof financial support to agriculture, it also shows that the financial support to agriculturewithout a benign interaction mechanism.Finally, based on empirical research findings, draw a conclusion of financial support toagriculture has played a positive impaction in rural economic growth.In order to betterserve the role of financial support for agriculture, purposed some suggestions as follows:established a multi-level financial system which including of cooperation and commercialand protection policy financial supply system. At the same time speeding up the reform ofefficiency in rural financial operation mechanism.Only in that way can we make the joinforce to accelerating of rural economic growth.This dissertation is structured as follows: Chapter1, introduces the research background and significance of the paper and themajor research structure and methodology, possible innovation and disadvantages.Chapter2, through combing of the literature at home and abroad, summarizes theexisting literature research methods and ideas.Chapter3, analysis of the current system of financial support to agriculture in China,found that although our country has established a relatively perfect system of financialsupport for agriculture, but there is lack of financial funds for supporting agriculture andoutflow of capital. proposed some recommendations by drawing foreign financial successagriculture methods.Chapter4, selecting appropriate data by theoretical model, as indicators with highcorrelation,therefore used the factor analysis dimension the original data,extracted thethree principal components,formed by the three principal components factors to evaluatingindicators of financial support for agriculture.Chapter5,established a VAR model, analysis the relationship between financial supportfor agriculture and the growth of the rural economy, by the unit root test, cointegration test,Granger causality test and other theories, to find out whether there is mutual relationshipbetween variables to promote mutual checks and balances.Chapter6, The empirical results show that financial support to agriculture and financialsupport to rural economic growth with the same changes, cointegration tests show that thefinancial support to agriculture and rural economic growth there is weak cointegration,Granger causality Testing also shows that financial support for agriculture and ruraleconomy have not formed between the positive economic impact of the role of theinteraction, indicating that the current financial support for agriculture on the role of ruraleconomic growth have not yet fully played out.Chapter7，through the empirical analysis combining the actual situation of China’s ruralfinance, putting forward on the basis of in increasing financial support to agriculture capitalinvestment, while focusing on improving the efficiency of financial funds for supportingagriculture and making some recommendations such as introduced new financial servicesinstitutions in rural areas and improving the rural financial environment.