The Study On The Effect Of Rural Finance On The Income Of Rural Residents

Farmers'income is the core problem of "Three rural issues", Increasing farmers' income is not only related to country development and stability, but also an important prerequisite for building a moderately prosperous society. Rural finance, which is an important factor in the development of the rural economy, plays an increasingly important role in rural residents'income. However, because there has been a more serious financial repression for a long time which led to an imbalance between supply and demand of formal rural financial, In most rural areas, Rural informal finance and Rural formal finance gradually form a dual structure, and in this dual structure, rural informal finance have a more important status in the rural financial system, which has become a major force behind the rural economic and rural residents'income. Therefore, in the realistic background of addressing "Three rural issues", there is important practical significance to extract rural informal finance out from rural finance and study the effect of rural formal finance and informal finance in rural residents'income, for the purpose of correctly evaluating the current situation of rural formal and informal finance, accurately grasp the problems of the rural finance system, realizing the increase of rural residents'income steadily.The paper extracts rural informal finance out from rural finance and study the effect of rural formal finance and informal finance in rural residents'income. First, the article describes the theory and current situation of rural finance and rural residents' income. Then, based on theory and current investigation, the paper establishs the spatial panel models and panel data quantile regression model to study the effect of the rural formal finance and informal finance in rural residents'income from following two aspects:increase of residents'income and the income gap. Finally, using the data of 30 provinces in China from 2003 to 2010 the paper conducts the empirical analysis. The results show that there is a spatial polarization in rural residents'income and the spatial spillover effect is obvious. Rural informal finance promotes the growth of farmers'income significantly while the rural formal finance does not. The promoting effect gets weaker as the rural residents'income increases, which indicates that rural informal finance contributes to narrowing the gap between rich and poor.The main conclusions of this paper are:in order to increase the income of rural residents and narrow the gap of income between different regions in rural areas, the government should support the development of rural informal finance, continue to standardize and improve the laws and regulations of rural informal finance, enforce the policies about advancing reform of the finance systems, speed up the development of private financial institutions, solve the problem of lack of financial services in rural areas, promotes the complementary advantages, mutual promotion and coordinated development between rural formal finance and informal finance, drive the steady development of the rural finance in the competition.