Research On The Impact Of Chinese Rural Financial Development Level On Farmers' Income Gap

Since the reform and opening up, China's rural economic development level and financial development level has been rising constantly. But in the meantime, we also find that, the situation of farmer income inequality is more and more serious. The rural financial institutions tend to give limited rural financial resources to large first, as a result, a large number of capital flows to the rich peasants, widening the income gap between farmers.Besides promoting the development of rural economy and improve the overall income of farmers, a healthy rural financial system should focus on improving the income level of low-income groups and narrow the income gap within the rural area. To help the poor out of poverty, is not only an important premise to promote the sustainable development of rural economy, but also the inevitable requirement of building a new socialist countryside.To guide the healthy development of rural finance and narrow rural income gap has been an imminent task.This paper explores the relationship between rural financial development and farmer income gap, and analysis present situation in the China's rural financial development and farmer' income on the basis of the income distribution theories and the rural financial theories consists of the agricultural credit subsidies theory, the rural financial market theory and the imperfect competition market theory. Then, using the relevant data of the year 1978 to 2013 in China, it does an empirical study on the influence from rural financial development to farmers' income gap by considerations of the formal and informal finance. This paper constructs index variables to reflect the level of rural financial development. Then it combines them with the farmers' incom gap index to do analysis of cointegration and short-term relationship by ARDL model. Second, it uses impulse response function to verify the short-term influence degree of rural financial development to farmers' income gap.Third.it uses threshold regression model to verify the influence from rural financial development to farmers'income gap. Last, the paper concludes analyzes the empirical results.Combining with the analysis of the present situation and the empirical conclusions, this paper draws a conclusion that rural financial development intensifies the farmers' income inequality, but it weaken the positive impact on the income gap when the development of formal financial scale goes into a higher level stage. The formal financial efficiency development overall easing the farmers income distribution. Informal finance development forward to expand the income gap between farmers, but it weaken the positive impact on the income gap when the development of informal financial scale goes into a higher level stage. Finally, based on these causes and above, the paper puts forward policy to narrow the income gap between farmers, including Increasing the supply of rural finance, strengthening the function of the formal financial institutions, regulating the development of informal finance in rural areas and so on.