Research On The Relationship Of Financial Development And Rural-urban Income Inequality In Eastern China

The dynamic development of the relationship between financial development and the income inequality has become a hot spot in the current study of financial theory. The thesis mainly studies the relationship between financial development and urban-rural income inequality and finds solutions to narrow the income inequality. Previous theories are analyzed theoretically. We believe that the influence is shown in three ways:finance development influences income inequality through the poverty reduction effect, the threshold effect and non-equilibrium effect. And the relationship between the three ways are analyzed. Then take Eastern China as a sample to analyze the relationship, including the empirical analysis whole panel data and provincial time series data.Firstly, we set Eastern China area as a sample, whose financial development and the urban-rural income present situation was described. Then we take empirical research on relationship between financial development and the urban-rural income inequality through panel data from 1978 to 2013, established a fixed effects model of the overall East China relation after the unit root test, cointegration test, Granger causality test. The results showed that the financial development、the level of urbanization and human resource have narrowed the income inequality between urban and rural areas. Economic growth and government spending have widened the income inequality on the contrary.Then, We take empirical research on relationship between financial development and the urban-rural income inequality through time series data of each province. Established regression models after the unit root test, cointegration test, Granger causality test. We find that in the economic developed provinces, financial development is conducive to narrow the income inequality, but in the economic undeveloped provinces financial development is conducive to widen the income inequality. This thesis argues that improving the efficiency of financial development is a effective way to narrow the income inequality.And then, analyze the difference between overall regression coefficients and sub-provincial regression coefficients. We find that in the economic developed provinces the impact of financial development on the income inequality is consistent with the overall. But in the economic undeveloped provinces the impact of financial development on the income inequality isn’t consistent with the overall. So This thesis argues that financial repression is existed in undeveloped provinces.Finally, on the basis of empirical research, the article makes the following recommendations for the Eastern china area’s problems of financial development. In the end of the thesis, further prospects about financial development and the income inequality is presented.