| One of the most important aspects of national economy is rural economy. China, as a large agricultural country, has leading position in rural population and agricultural output. Over the years, the rural areas have provided enormous human and material resources into national economic development, which is solid backing for China to achieve the great rejuvenation. Since the reform and opening up, people’s living standards changed significantly; people’s income increased dramatically which lead to the more widened income gap. This has become the potential threaten for China’s stability and sustainable economic development. The income gap is not just the gap between the eastern, central and western, more importantly, reflects between the urban and the rural economy and the people’s living quality. According to the <China Statistical Yearbook2012>, the average income of urban residents in1978was343.3RMB. The average income of rural residents was133.6RMB, the income ratio was2.57. in2011, average income of urban residents was21,809.8RMB, while over the same period the income of rural residents was only6977.3RMB. The income ratio is3.13. Both in the relative and absolute amounts, the income gap between urban and rural residents are increasing. If the trend cannot be reversed, China’s economic development might fall into the same experience of Latin American countries in the70s of the last century, which is called "middle-income trap", where social conflicts intensify and economy fall into a long-term, low-growth phase. Right now, world economic crisis still exists; among the economic promoting Troika, investment and export growth declined. Therefore, it should be top priority to study how to improve the proportion of consumption in the economy. For a long time, the lag of rural economic growth and rural residents’low income give a great potential to improve rural living quality. Improve the income level of farmers can increase the proportion of China’s domestic demand, and provide a strong guarantee for the sustained growth of the national economy. There are many factors that affect farmers’ income. Financial factors show an increasing impact on the income of the farmers. Throughout the development of the world economy since the Renaissance in Europe, finance influence is everywhere. Finance has played a significant role in the transformation of economic development mode for exporting countries especially when their increase is showing bottleneck. Right now, China is experiencing a post-industrial era, the transformation of economic growth mode, to get rid of the "middle-income trap" to raise national income, quality and balance, is particularly important role in the financial sector. Due to the weak economic strength, rural areas have been lacking financial institutions. After the90s of the last century, the state-owned commercial banks in rural outlets substantially reduced, economic development in rural areas had to rely on government fiscal expenditures. The economic development gap is more and more obvious between urban and rural areas. This dissertation’s starting point is to enlarge rural financial organizations, making farmers loans easy to get, which is also an important aspect to solve issues concerning agriculture, countryside and farmers.Before1990s, scholars globally have focused their studies on the rural financial impact on the development of rural financial, which do not directly reflect the level of individual farmers income. After1990s, Greenwood and Jovanovic (1990) analyzed the relationship between economic growth and financial development, income distribution, opened the prelude to direct the financial and income research. Domestic scholars Wen Tao, Ran Guanghe, and Xiong Depin’s<China’s financial development and farmers’ income growth> is the domestic pioneer work (2005), which become an important source of reference for related research. In recent years, the domestic scholars Xujia Yang (2011), Gu Shuzhen (2012) and Liu Yanfang (2012) also used a different method of analysis to study the relationship of rural financial impact on farmers’ income. However, the majority is analyzed from the perspective of the country. Studies specific to each province are very little and it is almost blank for the contrast between the different provinces. This paper is aiming to study different regions at this stage under the rural financial impact on farmers’ income. I selected Jiangsu, Henan, and Sichuan, as the representative of China’s eastern, central and western regions. I select these three provinces based on the following reasons:1, they are major agricultural province with national primary industry GDP in2011306.477billion RMB,351.244billion RMB and298.351billion RMB respectively which ranked third, second and fourth in the national rankings.2, they are most populous provinces; have large numbers of farmers which is a good representation.3, rural financial institutions in those provinces have some differences. Jiangsu has the most developed rural finance; Sichuan also made remarkable financial achievements in the past few years, while Henan had experienced difficulties in rural finance construction. Because of these considerations, I excluded Shandong, to reflect the impact of the intensity of the financial development of the income of the farmers in the provinces under different financial conditions.The structural framework of this paper is based on a theoretical introduction, situation analysis, and the study empirical analysis with comparison among Jiangsu, Henan, and Sichuan for their development of rural financial impact on farmers’ income, and layers of depth. The paper is divided into five chapters:The first chapter is the Introduction, focuses on the background to the study of the development of rural financial condition, purpose and meaning, and describes the framework structure of research ideas, comprehensive introduction to the full-text logical thinking. Chapter II is research result of relevant theoretical introduction and previous rural financial impact on farmers’ income. Related theories include the theory of financial development, the development of rural financial theory, income distribution theory, and etc. Previous scholars majorly have three different points of view for the relationship between financial and income:1, financial development and income presented inverted "U"-shaped relationship, which means deterioration before improvement.2, financial development played an role in promoting income.3, financial development will lead to the deterioration of income distribution structure. In this paper, after learning all three perspectives, I made my own assumptions:financial development is conducive to the improvement of farmers’ income. Chapter III is the normative analysis of the three provinces from economic, financial and income perspective. Through contrast, it is found that Jiangsu is taking a big lead regardless of the economic, financial status and income of the farmer than Henan, and Sichuan. These advantages may come from the reform and opening up priority to the development of the eastern region, but the sequence of development is not sufficient to illustrate the gap between these areas. Considering the same development situation in Sichuan and Henan, with Sichuan having worse basic conditions, in the past30years, Sichuan’s three industry structure is more reasonable than the Henan. Sichuan has simultaneous increase of wage and industrialized in come in farmers’ income structure. Although Henan wages income has been rapid developed in recent decades, it still showed the proportion of wage income, the proportion of non-agricultural industries, and the structure is in irrational situation. From a development perspective, Jiangsu in the next period of time will continue to maintain a substantial lead situation; Sichuan will maintain strong growth momentum, while Henan must adjust the industrial structure, making great efforts to cultivate the size of the non-public enterprises, and increase farmer’s wage income to significantly narrow the income gap between urban and rural areas in the future. Chapter Ⅳ used the empirical method to analyze the scale of rural finance, financial structure and financial efficiency of the income of farmers in their respective provinces. Johansen integration analysis, Granger causality test and unit root test were used in the empirical analysis. Chapter Ⅴ summarizes the advice and recommendations for rural financial development. There recommendations are based on Chapter Ⅳ empirical results. They might not fit all the provinces, but these recommendations are corresponding for the raised questions.Through empirical analysis, this thesis reached the following conclusions: First, there is long-term cointegration relationship among Jiangsu, Henan and Sichuan provinces. Secondly, there is inconsistent optimal lag length of three provinces, including Jiangsu0, Henan3, Sichuan1. The different length of the lag time of financial factors reflects the income effect of fast or slow. Jiangsu’s financial factors can be reflected in the income in the same year, Sichuan slightly slower, but requires only one year, while Henan will have up to three years to affect the income of the farmers. Jiangsu has most direct financial impact on farmers’ income while Henan is the most lag. Third, the financial scale of the income of the farmers in Jiangsu and Sichuan have positive correlation, while there is negative correlation for Henan; financial structure is positively related to the income of farmers in Henan and Sichuan, whereas Jiangsu presented inverse relationship; financial efficiency is only beneficial to farmers’ income in Jiangsu, Henan and Sichuan are the opposite. Empirical Analysis of the structure once again confirmed the conclusions of the analysis of the three provinces in the third chapter. Last but not least, Granger causality test verified the income of the farmers in the three provinces is more or less the reason for the changes in financial indicators, while in turn the various financial factors are not the reason for the changes in the income of the farmers. This description of the rural banking, finance with development as the income of the farmers belongs to the "demand-oriented" type finance.Talking about innovation, there are three major innovative points of this paper:1. a novel topic. This paper studied the relationship between the rural finance and the income of the farmers. Right now, there are no many articles directly study the relationship between the two and this paper can be considered as the increased research literature in this regard.2. Object selection. The majority of the previous articles studies from the country or division among eastern, central and western rural financial impact on farmers’ income. However, these studies point out the direction for future research, but these papers did not consider that those results cannot be used in practical applications. Provinces need to analyze and adjust it according to their own circumstances. This dissertation selected a representative of the province from each East, Middle and West regions, to study the development of the respective financial income of the farmers in the provinces by the contrast between the economic and financial status quo. It is found that different provinces need to take different rural financial development method which is practical for the future.3. The source of data. Because this thesis was written currently, there are more relative data to collect, which contributes the timeliness and stability of analysis. It is obvious that I have limited academic level; the article must have its own limitation. The analytical method is the same with previous scholars which was not innovative. If more complex analysis can be used in this study, the findings will be more refined and more practical. In addition, the thesis just studied the impact of financial factors on the income of the farmers, but farmers’ income factor is diverse, which need more variables to make the estimation. If more variables were taken into account, there will be more instructive meaning to the improving of farmer’s income. |
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