A Study Of The Impact Of Financial Development On Urban And Rural Residents’ Income Gap In Our Country

With the development and reform of economic system,China’s economy has developed fastly, and become the focus and center of the world’s attention. From the reform to the current,the economic development of our country has obtained the amazing achievement just in recent 40 years. A rising level of economic development in our country, our people also gain certain benefits. However, the benefits of urban and rural residents are not the same, which has directly led to the current one of the biggest concerns of the situation:people’s life has improved, but the urban and rural residents’ income gap has increased. This paper prepares to study what affects the income gap between urban and rural areas from the financial development point of view. Financial industry is not only a pillar industry of our country, but also the core of contemporary society. Financial development is in the process of economic development, on the one hand, it can provide the power for economic growth, on the other hand,it also affects on residents’ income distribution. However, the impact of financial problems on income gap must be taken seriously.We should solve this problem, and help to reduce the gap between rich and poor in China,help to formulate relevant macroeconomic policy.Financial development and economic growth, economic growth and income distribution and financial development and income distribution topic has always been the focus of the research at home and abroad. Especially with the topic of financial development and income distribution in recent years is the focus of the scholars study. Foreign scholars began to study the relationship in the 1990 s,and the study of our country in this field was later than abroad, we began to attach importance to the study in 2003.First of all, this paper studies from the aspects of domestic and foreign literature on financial development and urban-rural income gap,and summarizes their point of view. After introducing the related concepts, the author studies the mechanism of financial development’s influence on the income gap from three aspects, and analyzes the factors of influence on the income gap. The present situation of China’s financial development from diffent industries is analyzed, from the absolute gap and relative gap, this paper introduces the present situation of the income gap between urban and rural areas,which were compared between the provinces.we learned that China has a vast territory and abundant resources, but the regional difference of income gap also has a big difference.Again, the empirical analysis part is divided into two parts, the first part analyzes the financial development and urban-rural income gap in the time series data, using the related empirical econometric model of VAR model, impulse response and variance decomposition.It is concluded that financial development scale, economic growth and foreign trade dependency positively related to the income gap between urban and rural areas,and the efficiency of financial development is negatively related to the income gap, which are similar to the conclusion of most scholars. The second part uses the panel data of 31 provinces in domestic inspection panel model, and draws the conclusion: when financial development scale of the eastern, western and central is improved, the income gap is widening; the conclusion is consistent with the three region.When the efficiency of financial development of central and eastern is improved, the income gap is narrow, yet the west is the opposite. Finally, according to these two kinds of research and analysis the financial development’s influence on the income gap,the paper puts forward the solution and measures.