Research On Threshold Effect Of Inclusive Finance On Urban-rural Income Gap In China

In recent years,the national economy maintained good momentum of development,economic achieved a high-speed growth with great quality and efficiency.At the same time,large urban-rural income gap still cannot be ignored,fortunately Inclusive Finance put forward to solve the problem.Academia domestic and overseas have been paying close attention to the relationship between financial development and income gap,however,as an emerging concept,how will Inclusive Finance impact on income gap that remains to be inspected.On the basis of existing research results and Chinese practical situation,the research attempts to study the influence of Inclusive Finance on urban-rural income gap in China from three aspects including theoretical analysis,current situation analysis and empirical analysis.It uses several research methods such as the combination of theoretical and practical analysis,qualitative and quantitative analysis,empirical and normative methods and so on.In the part of theoretical analysis,this paper explains the connotation and operative mechanism of Inclusive Finance,points out that Inclusive Finance exerts its impact on urban-rural income gap through four major effects:threshold effect,poverty reduction effect,containment effect and trickle-down effect,restricted by the external conditions such as economic development level.Status analysis section shows the current situation of urban-rural income gap and Inclusive Finance through the construction of two indices called IG and IFI on account of China’s inter-provincial panel data from 2005 to 2015,then reveals the gap between different regions by horizontal and vertical contrast.During the empirical part,this paper uses panel threshold model to illustrate that the influence of Inclusive Finance on the urban-rural income gap exists in the threshold effect of different stages of economic development.With the gradual development of economic,the influence presents a similar inverted "U" type which contains a significant to gentle expansion finally a definite reduce.Trace its root,the nonlinear relationship depends on the comprehensive effect of various influence mechanism in different stages of economic development.According to the current situation in our country,the development of Inclusive Finance should be perfected from these aspects:perfect legal construction related to Inclusive Finance to play an important role in policy guidance and encouragement;specify the functional orientation of financial institutions and strengthen the supply-side reform of financial services;establish and improve the monitoring system of Inclusive Finance indicators to promote the sustainable development of the financial industry;carry out a financial reform and innovation to form a long-term interactive mechanism between Inclusive Finance and farmers’ income growth.