Correlation Analysis Of Financial Development And Urban-Rural Income GAP

Income distribution problem is an old problem of the academic community, the academic community have made long-term research of its affecting factors. As into the 21st century, with the rapid development of the financial system and its bigger impact on people’s lives makes it began play a greater role in the income distribution. So, studies of the mechanism and the actual effect about financial development and income distribution in this paper have great realistic meaning.This article basis on summarizing previous literature on financial development and urban-rural income gap theory and the correlation analysis of them. This paper uses Jiangsu Province,2002-201149 prefecture-level and county-level cities data, analysis with panel model, and divides data into southern, central and northern regions to make models, compare and analysis the reasons for the differences.Based on the above analysis, this paper makes a few findings:First, in Jiangsu Province, financial development has a significant influence on income distribution, but in the analysis of financial development must distinguish between different indicators of scale and efficiency, as in Jiangsu Province, improvement of the financial efficiency is narrowing the urban-rural income gap, and the expansion of the financial plays the opposite role. Second, there is a "U" shaped relationship between financial efficiency and income gap in Jiangsu Province, that means in current situation, financial efficiency can reduced urban-rural income gap, and with the continued development of financial efficiency will likely widen the gap. Third, after regional analysis in Jiangsu provinces, we found that the three major regional have big difference between financial development and economic development, which make the difference of affecting intensity and direction about financial development and the urban-rural income gap.Especially in southern and Northern showing a clear regional characteristics.Finally, the paper put forward several policy recommendations basis on the conclusions of the analysis:First, to guide the process of financial development, we must take into account both scale and efficiency, so that financial development can promote economic and play greatest to narrow the income gap. Second, in the flow of financial resources, can’t blindly use administrative means, we must respect the natural profit-driven capital from industries and regions. Starting with improving return on capital, take the initiative to attract the flow of financial resources to areas of greatest need. Third, facing different situations in the three areas, carry out local financial development and equity financial resources to promote efficiency in the province-wide distribution. Fourth, in the financial development and financial expenditure and other aspects, better support must be made for rural areas to improve the income level of rural residents.