Research On The Effect Of Unbalanced Rural-urban Financial Development On Rural-urban Income Gap In China

Abstract:Affected by long-term dual economic structure, significant difference was found in urban and rural development in our country. And rural-urban income gap is still large, which has become the restriction factor of the country’s economic and social development. The financial development is considered to be an important means of promoting rural economic development, so as to increase farmers’ income. But the current rural financial market development is not yet mature. The imbalance of urban and rural financial development is serious, which even aggravated the gap between urban and rural income distribution. Based on this, this paper choose the Shandong province, Anhui province and Yunnan province which separately presents the east, the central and western regions, to research the influence of rural-urban financial development imbalance to rural-urban income gap. We expect to find the specific financial development factors influencing the urban and rural residents income gap, and puts forward corresponding Suggestions for improvement.The paper firstly analyzes a large number of relevant documents and research achievements at home and abroad, then makes theoretical explanation on financial imbalance development and income distribution. On this basis, we explore the mechanism of how urban and rural finance unbalanced development affects rural-urban income gap.Then, the thesis constructs Measure indicators of rural-urban income gap, financial development scale, financial development efficiency, space distribution of financial institution and financial structure. With these, we do the present situation description and comparative analysis of rural-urban income gap and rural-urban financial imbalance development on the nationwide, the representative provinces in the east, the central and western regions in China. We find that rural-urban income gap is still large and different between regions. Rural-urban financial imbalance phenomenon is serious, regional differences are also obvious.Next, we build a VAR model, using the co-integration test, impulse response function, variance decomposition and granger causality test to empirically test the impacts of the rural-urban finance imbalanced development on the income gap between urban and rural areas. Results show that, the disequilibrium of financial development scale, financial development efficiency and financial structure between urban and rural areas will cause different degree affects on rural-urban income gap. What’s more, the influence factors and degree are different between regions.Lastly, on the basis of empirical test results, the paper put forward a series of suggestions in promoting the rural financial development and narrowing the income gap between urban and rural areas from the perspective of financial development. These include expanding rural financial development scale, improving rural financial development efficiency, balancing financial structure and space distribution of financial institution, etc.