A Study Of The Relationship Between The Financial Development And Urban-rural Income Disparity In Shanxi Province

It has been30years since China’s reform and open policy，during which periodthe economy of China has achieved a remarkable achievement and China has becomethe word’s second largest economic entities.However，what companies the China’seconomy increase is problems such as continuous expansion of disparity of incomedistribution，China’s Gini coefficient has rose to0.473in2013，surpassing0.4which isthe internationally acknowledged as the alert line.Especially the disparity betweenurban and rural incomes has grew from2.4in1979to3.03in2013. Widening incomegap will not only hamper China’s economic to transform and upgrade，but also destroysocial harmony and stability.Finance is the core of the economy，as an important means of promoting the flowof resources and allocating the resources，the influence on the distribution of nationalincome can not be ignored.Meanwhile ShanXi as the representative of the resourcetransition，with typical role model，therefore studying the relationship between financialdevelopment and urban-rural income gap is of great significance.Based on the collection of literature and empirical studies existed，this article willanalyze and study the relationship between financial development and urban-ruralincome gap.Firstly，this article describes the research background and significance，research methods and the possible innovation and insufficiency.Then，based on thedomestic and foreign theories of the financial development theory and the incomedistribution theory， the article analyses the mechanisms that influence the incomedistribution gap，including mechanism of economic increase，threshold mechanism，non-equilibrium mechanism and finally poverty reduction mechanism.Secondly，thearticle analyses the situation about ShanXi financial development and rural-urbanincome gap， founding that the level of ShanXi financial development is in thecontinued，but the overall level is not high.The changing trend about the urban-ruralincome gap of ShanXi and the national has remained broadly consistent，and both ofthem existed a contradiction of the big income gap in urban and rural areas.Thirdly， based on specifications and data from1979-2003， the article construct the VAR modelwhich involves five variables:financial development scale， financial developmentefficiency，financial structure，per capita GDP，urban-rural income gap.We use theempirical method to study the relationship between financial development andurban-rural income gap.An empirical analysis of the results can be concluded:thefinancial development scale and the financial development efficiency are the mostimportant factors that influences the urban-rural income gap， the financialdevelopment and per capita GDP growth have a positive impact on the urban-ruralincome gap，the financial development efficiency growth and the financial developmentoptimization have the reverse impact.Finally，based on the research of the relevantconclusions， this article recommends some policies from the aspects of financialdevelopment scale， efficiency and structure.we should curb the outflow of ruralfinancial resources，improve the efficiency of financial development and eliminate thestructure of urban and rural dual financial development.