An Empirical Study On The Impact Of Financial Development On Urban - Rural Income Gap In China

As the core of modern resource allocation, financial plays an increasingly important role in China’s economic construction. According to the National Bureau of Statistics figures show that the financial value added in GDP in 1978 from 1.9% to about 5% of the "Twelfth-Five" period, for example, in 2013, Shanghai’s financial value added even cent of GDP 12.6%. However, with the rapid development of financial development, we cannot ignore such a phenomenon, namely the distribution of the income gap is widening. The related figures show that from 2003 to 2012, our national Gi-ni coefficient was in between 0.47-0.49, and reached the highest level 0.491 in 2008, and then began to gradually decline, even though Gi-ni coefficient was lowest 0.474 in 2012, but still higher than 0.4 international alert line, namely at a high level overall. Among the many factors that affect income inequality, the financial im-perfection market is a potentially important cause of it. Financial development could reduce the income gap between urban and rural residents or not has been the issue for policy makers and researchers concerned, but in previous studies about this theme, mostly researchers ignoring the spatial effect of the income gap between urban and rural residents. Therefore, this paper attempts from the perspective of urban-rural income gap space, starting to explore the impact of the relationship between financial development and dynamic path of income gap, which has important theoretical and practical significance in this area.In this article, first of all, by using provincial data to examine the spatial correlation on the income gap between urban and rural, and test showed that most Moran’I index are under the 5% level, and the index are positive value, which verify the hypothesis that spatial correlation exists in the income gap between urban and rural residents.Secondly, by selecting and testing the model, we finally choose a spatial Durbin random effects model to analyze the research object. The results show whether the rho estimate value of spatial lag model, or rho estimate value of spatial Durbin model, all of them are up 1% significance level, which has proven the existence of space-related factor and overflow assumptions in income gap between urban and rural residents once again.Finally, by analyzing the effect of spatial Durbin model decomposition, we make conclusion that in direct effects, financial scale development coefficient is positive, but not significant, indicating that improve the financial scale of development in region will widen the income gap between urban and rural residents, the factor of financial efficiency and structure is negative, indicating that the improvement of the regional financial efficiency and optimize of the financial structure will reduce the income gap between urban and rural areas of the region; in Indirect effects, the factors of Financial scale、 financial efficiency and financial structure are positive, indicating that the increasing of finance scale and finance efficiency,and optimization of financial structural in neighboring regions will widen the income gap between urban and rural areas in this region.