The Influence Of Rural Finance On The Income Gap Between Urban And Rural Areas

The gap between urban and rural areas has been expanding,which has become a potential threat to social harmony.The gap between urban and rural residents' income level is the main embodiment of the gap between urban and rural areas.There are many reasons for the widening income gap between urban and rural areas.Many domestic and foreign scholars have analyzed these reasons from many angles.This paper will mainly study the impact of rural financial development on the income gap between urban and rural areas.The theoretical analysis of this paper mainly studies the transmission mechanism of the impact of financial development on the income gap between urban and rural areas.The research shows that the financial development mainly influences the income gap between urban and rural areas through direct mechanism and indirect mechanism.The direct impact mechanism includes the threshold effect of financial development,the poverty reduction effect of financial development and the non equilibrium effect of financial development.The indirect effects of financial development on the urban-rural income gap is mainly through economic growth to conduct financial development will first improve the efficiency and the conversion of savings and investment rates,gathered in the financial sector funds will enter into the demand side of the capital through direct and indirect financing channels,which will undoubtedly expand social reproduction.The improvement of social reproduction will,on the one hand,feed the financial sector through savings and investment.On the other hand,it means the improvement of economic efficiency and economic growth.Economic growth will reduce the income gap between urban and rural areas,that is,the income distribution of urban and rural residents becomes more equitable and the income level is higher.This will also increase the savings of residents and further promote the development of the financial sector.So follow the circle.Based on the panel data of 27 provinces of China during 2006 ~2010,and use panel threshold regression model of Hansen,with the level of economic development as the threshold variable,this paper test the influence of rural financial development on the urban-rural income gap,and summarize the mechanism of the influence of rural financial development to urban-rural income gap.The results show that the development of rural finance will expand the income gap between urban and rural areas,but this expansion is not a simple linear relationship.The higher the level of economic development in rural areas,the expansion of rural financial development gap between urban and rural income is weaker.When the economic development across the first threshold,the expansion of rural financial development on the urban-rural income gap significantly enhanced.When the economic development across the threshold value of second,the expansion of rural financial development on the urban-rural income gap and significantly weakened.In addition,the study also found that the level of urbanization and government economic behavior will expand the income gap between urban and rural areas,and the level of education development and economic development will narrow the income gap between urban and rural areas.