The Empiircal Study On The Inlfuence Of Inner Mongolia Financial Development To Urban-Rural Income Gap

Finance plays a vital role in the economic development of a society, and the financialeconomy has gradually become the inevitable trend of economic development of eachcountry. Since the reform and opening up, the Inner Mongolia economic has rapiddevelopment. The first ten years of the twenty-first Century, the average annual economicgrowth rate reached18.7%. The economic growth rate ranked first for consecutive eightyears in the country in2002to2009. With the rapid development of economy, the financialindustry in Inner Mongolia has also made rapid development, basically completed thediversified market structure, which is coexistence of a variety of financial institutions. Thetotal financial assets rise. Aiming at the problem of income disparity, the scholars frommany aspects research the cause of the widening income gap, but the early scholars seldomconcerned about the relationship between financial development and income distribution,but as the main research incidental conclusion. In recent years, scholars have graduallyincreased the attention to incidental conclusion. Scholars realize there is a connectionbetween financial development and income gap. It needs to carry out a study between them.In this paper, based on the actual situation in Inner Mongolia, discuss the impact of InnerMongolia financial development to the income gap between urban and rural residents.In this paper, Inner Mongolia financial development threshold effect, region non-equilibrium effect, poverty reduction effect on the urban-rural income gap build principalcomponent regression model, co-integration model, VAR and impulse response model tofinish empirical analysis. The threshold effects of financial development will increase theincome gap between urban and rural areas of Inner Mongolia, the regional non-balancedeffect of the financial development will increase Inner Mongolia income gap betweenurban and rural areas, the poverty reduce effect of the financial development will reducethe urban-rural income gap in Inner Mongolia. Financial development three mechanismswhich impact the income gap between urban and rural are interrelated, interaction, havetogether influence on the income gap between urban and rural areas. The total effect is theexpansion of the income gap between urban and rural areas of Inner Mongolia.Based on the finance reality of Inner Mongolia, considering the bank, securities,insurance industry, separately design the financial development scale, efficiency, structureindex to build co-integration model between financial development scale, efficiency,structures and income gap between urban and rural areas. The result of the model is thatfinancial development scale, efficiency, structure and urban and rural areas income gap exists the positive correlation, negative correlation, negative correlation. So, the reasonablearrangement of the Inner Mongolia financial development scale, improve the efficiency ofthe Inner Mongolia financial development, improve the Inner Mongolia financialdevelopment structure, can effectively reduce the income gap between urban and ruralresidents in Inner Mongolia.To summarize the results of theoretical and empirical research, put forward thecorresponding countermeasure and suggestion. On the one hand, development Finance inrural areas. Including: the development of new types of rural financial institutions, thestrict supervision to folk financial organizations in the business activities, strengtheningconstruction of agricultural insurance system, to support agricultural credit guaranteeinstitutions construction; on the other hand, the reasonable arrangement of financialdevelopment scale, improve efficiency, optimize the structure. Include: give full play to thefinancial institutions, improve the efficiency of financial institutions, building a diversified,multi-level financial system.