Research On The Impact Of Rural Finance Development On Rural Poverty Alleviation In Gansu Province

Poverty is a global social phenomenon and a worldwide problem,having much to do with the basic survival needs of human beings. It alsohas a direct impact on human’s survival and development. As China isundergoing the critical period of deepening reform and socio-economictransformation, poverty has not yet been solved, particularly in thewestern rural areas, restricting the western development strategy and thegoal of building a fully well-off society. Gansu is one of the typicalrepresentatives of the less developed western provinces. Along witheconomic and social development and the deepening of economic reformin rural areas, Gansu Province has made a series of achievements inpoverty alleviation, while the overall poverty reduction task is stillarduous. As an important driver of economic growth, rural finance playsan important role in optimizing the allocation of resources in rural areas.There is a certain practical significance to study the relationship andimpact ways between rural financial development and rural povertyalleviation in Gansu province.Firstly, this article summarized home and abroad literature on therelationship between financial development and poverty alleviation,based on this, having a theoretical analysis on the transmissionmechanism of how financial development affect poverty alleviation from direct and indirect aspects. The direct impact is based on “McKinnonConduit Effect”, while the indirect impact is analyzed from financialdevelopment and income distribution. Then this paper collected the1990-2010related rural data and made a detailed analysis of thedevelopment status of rural finance and poverty in Gansu province, alongwith the empirical analysis. The empirical results show that rural financialdevelopment plays a positive role in rural poverty alleviation in Gansuprovince，contributing more with the continuous development of economy.From the indirect effect, Gansu rural financial development improvesrural per capita consumption level by promoting economic growth, and inturn contributes to poverty alleviation. In terms of income distribution,the income gap between urban and rural areas has a positive effect onrural per capita consumption, the amplitude decreasing as time goes by,but in the late term, it has a negative effect on rural per capitaconsumption, showing that with the enlargement of the income gap, therural consumption level drops gradually, which goes against povertyalleviation. Finally this article made some suggestions on the basis oftheoretical and empirical analysis.