The Impact Of Financial Development On Urban-rural Income Gap In Liaoning Province

World Bank revealed that China’s Gini coefficient had exceeded the international warning line,to a degree of 0.47 in 2014.It is true that the urban-rural income gap is increasing in Liaoning Province.While there are many ways to explain,one of which is financial development as finance if playing a more and more important role in economy.Theory provides a paradoxical predict:the extensive margin tends to reduce the income gap,while the intensive margin of financial development will enlarge it.The development of finance will both increase wages through human capital and properties through saving rate.From the constitute of aggregate demand,the development of finance lead to economic fluctuation and growth by affecting consumption and investment,and economic growth have an impact on income distribution.The empirical analysis also give contradictory results,probably due to different methodology and indicators.The density of finance is often ingored in research,but it not only represent the opportunity of enjoying financial service,but also increase properties in a era of encourging property income.This thesis use time series including cointegration test,Granger causality test,impluse reponse and variance decompositon.The empirical result indicates that the size and efficience of financial development will reduce the income gap,while the density of finance will enlarge the gap.Besides,the rural density will not promote the rural income,but increase the urban income.So,is is imperative to enrich our financial system.