The Interaction In Development Of Rural Economy And Finance

As an important part of the financial system, rural finance influences therural economy, and thus affects the overall national economic operation.China’s economic development speed is slowing down. Under the backgroundof the slowdown in economic development, there is a need of rural finance togive vigorously support to keep the development of rural economy sustained,stable and overall. Rural finance is included in the rural economic system,playing a certain role to the development of the rural economy, but alsoaffected by the rural economic environment.As a large agricultural country, the influence of China’s rural economicdevelopment on its economic development is very significant. Therefore, theproblem of "three agriculture" always needs to be the focus of view in theprocess of modernization of our country. Under the background of deepeningrural reform and realizing agricultural modernization, the reform of the ruralfinancial system need to be further deepened to meet the requirements ofsupporting and servicing for rural economic development. The basicconclusion of existing researches shows that good rural finance developmentcan be a positive and effective role in the rural economy growth, and the lattercan also further promote the development of the former. There is largedifference between regions in our country, and the effects of various factorsare affected. Therefore, we need a more comprehensive, specificunderstanding of China’s rural financial development to find the path anddirection for future development.In previous studies, scholars have accumulated many outcomes about the relationship between finance and economy, rural finance and rural economy.Based on the previous theory and combined with the actual data of China’srural economy and financial development in present stage, this paper studiesthe interaction of rural economic growth and rural financial development of thenationwide. Then the situations in different regions are also analyzed. Thearticle is divided into five parts:Chapter Ⅰis the introduction, mainly introduced the research background,the research significance, the research method and innovative points of thisarticle.Chapter Ⅱis the journals reviewed. The related theories on financialdevelopment have been arrangement which contain two parts: the theory offinancial development and the theory of rural financial development. Then theresults of the empirical research about the relationship between financialdevelopment and economic growth from domestic and foreign scholars arebriefly summarized.Chapter Ⅲ is the analysis of the present situation of China’s ruraleconomy and rural financial development. Four aspects like the first industryGDP, farmers’ income and consumption, the development of rural financialinstitutions and rural residents’ savings are used to describe the developmentsituation of China’s rural economy and finance. This part also carries on theanalysis of the mechanism. This part provides a data basis for the empiricalinterpretation in following chapter.Chapter Ⅳ is the empirical research of the interaction of the country’srural financial and rural economic. The of VAR model is established, and themeasurement methods of unit root test, cointegration test, impulse responsefunction and the Granger causality test are used for data analysis. Theempirical method of this part followed the framework of previous scholars onthe smaller area. The conclusions are consistent with theirs, namely the ruraleconomy and rural finance has a long equilibrium relationship that the twoinfluence and promote each other. Chapter Ⅴ is the second empirical studies of this paper which is basedon the regional data. The31provinces, autonomous regions and municipalitieswere divided into three areas, and respectively analyzed using panel datamodel. This is the innovation point of this paper. The results show that, thepositive impact of financial scale on economic is significant, and has littledifference between various regions. However, the capital operation efficiencyof rural financial institutions has no significant effects on the rural economy.The last part is a conclusion of this paper.