Study On The Effect Of Financial Development Supporting To Urbanization

The urbanization is an inevitable product of modern economic andsocial development, and it’s an important indicator to measure the degreeof modernization of a country and territory. Finance,as the core of moderneconomy,is bound to generate a certain impact on the development of theurbanization.Acording to the process of the urbanization, a large numberof capital requirements need to have a complete, reasonable financialsystem as a support.And the larger financial scale, reasonable financialstructure will play a definite role in promoting the process of urbanization.Therefore, analysising the effect of financial support has an importantacademic value and practical significance in the process of urbanization.This article expound the theoretical basis and the internal mechanismof the financial support for the development. Firstly,in terms of thefinancial support of the urbanization of the population, financialdevelopment can provide sufficient funds to support the formation ofhuman capital, such as supporting the rural education, transfering thepopulation in on-job and off-job training.In other words, human capital isthe core of the the urbanization of the population,and the formation of thehuman capital accelerated the urbanization of the population. Secondly,financial development can support the construction of city’s infrastructure,improve public service quality,increase the attractiveness of the city,which is an important part of the urbanization of the population. Thirdly, in terms of the financial support of the urbanization, from the capitalration and control, the city’s financial play a positive financial role tomeet the needs of the funding requirement to adjusting the industrialstructure, to promote the reasonable and advanced industrial structure,and to contribute to the city’s industrial structure adjustment. Financialsupport can coordinate industrial relations, make the right proportion invarious industrial sectors, because seeks profit is the signature of the fund,the industry that are not suited to the modern development will beeliminated due to lack of funds. The difficulty of the development ofsmall and medium enterprises is financing difficulties, and reasonablefinancial structure can meet the small and medium enterprises’s fundingneeds and to promote the development of the secondary and tertiaryindustries.This article is based on multivariate VAR model, is used ADFstationary test to examine the stationarity of each variable and itsfirst-order differential variable,then it used Granger causality test toexamine the causal relationships of the smooth variables, finally,it usedthe impulse response function and variance decomposition model toexamine whether each endogenous variable affect other variables.According to the result, the non-stationary financial developmentindex and non-stationary urbanization index’s first-order differenc issmooth, financial development create the grand reasonsto the process of urbanization.Therefore, from theview of overall trend,financialdevelopment has a promoting action to the urbanization. On the otherhand,there are different effect to promoting urbanization btween the scaleof financial development and financial structure. The financialdevelopment’s scale and structure that can significantly promote theurbanization of the population have a3-5years’ lag period.