Research On The Impact Of Rural Finance On The Increase Of Farmers’ Income In Shandong Province

"Three Agricultural Problems" becomes the focus of the economic development of our country, and the steady growth of farmers’ income has positive implications for the development of the rural economy and the stability of rural social. As a support department of the agricultural development, rural financial is playing an important role in the growth of farmers’ income, and the income of the farmers cannot grow without the support of rural finance. Since the reform and opening up, the rural financial reform has made certain achievements, but there are still a series of problems, the support efficiency for agriculture is not high, the structure is irrational, and the phenomenon of capital outflows is serious, which have restricted the development of rural area. As a major agricultural province, Shandong Province presents a phenomenon of the steady growth on the income of the farmers, but the income gap between urban and rural areas is still very large, which has restricted the enthusiasm of the farmers’ production and is not conducive to the development of the rural economy in Shandong. Therefore, the study on the impact of development of rural finance on the income of the farmers in Shandong Province is of great significance in promoting the growth of farmers’ income.Based on the statistical data from 1991 to 2010, this article combined the farmers’ income status with the rural financial development status in Shandong Province, the impact of rural financial on the income of the farmers was analyzed. The scale of rural finance, rural financial efficiency, rural financial institutions and the index analysis on the level of investment in rural areas were selected to study the impact of rural financial on the income of the farmers. The unit root test, Co-integration test and Granger causality test were used to draw the conclusions. There is a long-term co-integration relationship between the rural finance and the income of the farmers in Shandong Province. The development of rural financial efficiency has a positive effect on farmers’ income in the long term, but the scale of rural financial development and the structure of rural financial development have a negative effect on the income of the farmers. The development of rural financial efficiency and the scale of rural financial development have a positive effect on farmers’ income in the short term, but the structure of rural financial development has a negative effect on the income of the farmers. The rural financial development efficiency is the main factor among all of the rural financial indicators affecting the growth of farmers’ income. The development of rural financial efficiency is unidirectional Granger cause of the growth of farmers’ income, the structure and size of rural financial development is not the Granger cause of farmers’ income growth. Finally, on the basis of the empirical conclusions, some policy recommendations to develop the rural finance and promote the growth of farmers’ income were put forward, we should transform government functions, increase the support for agriculture, improve the financial service system, improve the efficiency of financial support for agriculture in rural areas and establish a benign mechanism for flow of capital.