The Study On The Influence Of Rural Finance Development To The Residents’ Consumption

As a vast consumer market with a population of eight hundred million, There is alarge room to improve in China s rural market. But the consumption ability andconsumption basis are weaker in rural market than urban market, which restricts theenhancement of rural consumption s level. Establishing the long-term mechanism ofexpanding rural residents consumption has become a top priority. In addition to theneed the government s policy support which can help farmers, building a long-termmechanism of rural residents consumption also needs the participation of rural finance.In this context, researching the effect of rural financial development of residents consumption to residents consumption level is of great significance.This paper is to research the rural residents consumption from the financial pointof view. Firstly, this paper analyzed the conduction mechanism of influenc e about therural financial to the residents consumption. The rural financial development canaffect residents income of family, so that it can affect residents consumption ability,then the residents consumption level. it can also affect the liquidity constrains, theanticipation of uncertainty, the environment of consumption, so that the rural financialcan affect the consumption tendency which affects residents consumption. Secondly,in the empirical aspect, based on the VAR model, an empirical test about the influenceof rural financial development to residents consumption has done, which turns out thatwith the development of the scales of rural finance， the residents consumptionincluding two kinds of consumption level grow up, and the influence on livingconsumption is larger, but the rural efficiency financial development doesn t has apositive impact on residents consumption due to the low level of the rural finance sefficiency. On the basis of the result, further empirical test is done to research thechannels of influencing about the rural financial development to residents consumption. It turns out that the rural financial development can affect residents consumption by influencing the residents income and liquidity constraint. Lastly,Clearing up the importance of rural financial in improving the residents consumption,the paper puts forward policy suggestions on how to promote the rural residents consumption by developing rural finance，so that the rural finance can give a bettersupport to expanding the rural consumption market.