The Research On The Influence Of Financial Development To Income GAP Between Urban And Rural Areas In Anhui

With the sharp increase in gross product in Anhui, and residents’ living standards greatly improved, residents’ income gap between urban and rural is also more and more obvious. In recent years, with the deepening of financial reform and in the process of financial development promoting economic growth, financial development plays a more and more important role. Based on the perspective of financial development, studying the problem of the income gap between urban and rural areas in Anhui is of great significance to make policy to ease the income gap further widened.This paper firstly discusses the mechanism of financial development the income gap between urban and rural areas based on the review of related theory on financial development and income distribution and key from the threshold effect and unbalanced effect of financial development; then, combining with the existing measure, this paper measures financial development level and income gap between urban and rural areas in Anhui and also carry on the descriptive analysis combined the basic situation of Anhui.This paper constructs vector autoregressive model (VAR) and studies the specific influence of the overall financial development and rural financial development to income gap between urban and rural areas in Anhui respectively on the basis of theoretical analysis and measurement analysis using the relevant data from1980to2012of Anhui. Cointegration analysis shows that there is a long-term equilibrium relationship between the overall financial development, rural financial development and the income gap between urban and rural areas. Financial development scale and efficiency are widening the income gap between urban and rural areas in Anhui; While the ratio of rural financial credit has a negative effect to the income gap between urban and rural areas. Impulse response results show that financial development scale and efficiency has a long continuous positive influence to the income gap between urban and rural areas, and rural savings and the ratio of rural credit produce different impacts to income gap between urban and rural in areas of Anhui. Variance decomposition results show that the efficiency and scale of financial development and the level of invest have a larger contribution to the change of the income gap between urban and rural areas in Anhui.Finally, according to the analysis of specific empirical results, this paper, based on the perspective of financial development, gives targeted policy suggestions to ease the income gap between urban and rural areas further widened in Anhui.