A Study On The Analysis Of Financial Efficiency And The Income Gap Between Urban And Rural Residents In China

Since 1978, China’s economic construction has made remarkable achievements.The people’s living standards is also improved. At the same time, the income gap between urban and rural residents is widening, which is not conducive to social stability and seriously affect the healthy development of the national economy. Financial efficiency is an important indicator of financial development level. It refers to the allocative efficiency of financial resources.It is the key factor of driving the rapid economic growth, improving residents’ income. But the special urban-rural dual economic structure led the uneven financial development level. The financial efficiency also showed unbalanced.The poor rural financial efficiency has a great impact on the income gap between urban and rural residents. Therefore, it is meaningful to explore how the unbalanced financial efficiency effects the income gap.Finally,this paper suggest to increase the rural finance efficiency.By increasing the farmers’income, narrowing the income gap between urban and rural residents.This article draws different study of the relationship between financial development and income distribution.Combined with the definition of financial efficiency, this article examine the financial efficiency how to narrow the income gap between urban and rural residents. Firstly, this article analysis the impact of unbalanced urban and rural financial efficiency to the income gap. Secondly, this article combined with China’s specific national conditions, found that differences between urban and rural financial efficiency widening income gap.Thirdly, this article select the indicators of disequilibrium financial efficiency and income gap between urban and rural residents,construct a VAR models. The empirical results show that the non-balanced urban and rural financial efficiency widening income gap.We should focus on improving the efficiency of rural finance and promote urban and rural financial efficiency to narrow the income gap. Finally, the paper suggest how to balance financial efficiency to narrow the income gap between urban and rural residents. For example:improving the efficiency of urban and rural savings mobilization, improving the ability of rural savings investment conversion, improving the financial institution’s efforts to support township enterprises.