Impact Of Financial Development On Income Inequality And Poverty

China is the world's largest developing country,economic development has made remarkable achievements,but appeared special problems in such process of development inevitably,such as:income inequality and poverty.According to data provided by the national bureau of statistics in our country,by the end of 2015,China's gini coefficient was 0.462,more than the international warning line of 0.4.In addition,the urban and rural income ratio is 2.73:1.At the same time,by the end of 2015,China's poverty population size of 55.75 million,there are still quite a number of.There are lots of factors affecting income inequality and poverty over the past 20 years,financial development on the impact of income inequality and poverty in academic circles are discussed more and more,and governments are the financial development as one of the important measures to reduce income inequality and poverty reduction.In theoretical analysis part of the article,I discussed the transmission mechanism of financial development to income inequality from the threshold effect and drops trickling water effect,and summaried on the impact of financial development on poverty from direct effect and indirect effect.Empirical analysis is divided into three parts:the first,selecting financial development scale and efficiency indicators to measure the financial development,choosing tal index to measure income inequality,using 2000-2013 panel data analysis of financial development on the role of income inequality,and its regional differences;Second,selecting urban gini coefficient and rural gini coefficient to measure income inequality,respectively,using data from 1981 to 2013 to build temporal data model,analysis of financial development on the role of income inequality;Third,the index was selected to measure poverty was poverty incidence,using data from 1981 to 2013 to establish the VAR model and analysis of the effect of financial development on poverty.The empirical results showed that the overall financial development of our country residents income inequality was expanded,this was especially true in the midland and western region,but in the eastern region residents income inequality was narrow.Second,the financial development did not reduce the urban and rural residents internal income inequality,instead of worsening income distribution.Finally,the financial development of our country had a slow effect on rural poverty,but the strength was hampered by the rural internal income inequality,therefore,poverty reduction effect was not obvious.Based on the above conclusions,this paper put forward some policy suggestions.First,the perfect is given priority to with formal financial,informal finance is complementary in rural areas and underdeveloped regions financial system.Second,strengthen government guidance,to accelerate the process of capital accumulation drops trickling water effect.Third,enhance the support of financial services for poverty alleviation.Finally,increase the tilt of the economic development of poverty alleviation.