The Impact Of China's Financial Development On The Income Differences Between Urban And Rural Areas

Since the reform and opening up,China's economy has been developing vigorously,the gross national product has grown rapidly,and residents' living standards have been greatly improved.However,the income gap between urban and rural residents in China has continued to widen,affecting social stability and healthy economic development.This article discusses China's income distribution from the perspective of financial development,and clarifies the impact of financial development on the income gap between urban and rural areas in China.It will help China solve the gap between the rich and the poor and formulate relevant macroeconomic policies to build a well-off society.There is an important theoretical and practical significance for building a well-to-do society in an all-round way.Based on the Hansen threshold regression model and the panel data of 29 provinces(autonomous regions and municipalities)in China from 1991 to 2016,this paper tests and discusses the nonlinear relationship and internal mechanism of financial development and urban-rural income gap.Through research,we have found that financial development has a different impact on income differentials between urban and rural residents within different thresholds.Specifically,when the level of financial development is at a relatively low level,the improvement in the level of financial development will help reduce the income gap between urban and rural residents.When the financial development level reaches the first threshold,the improvement of the financial development level will reduce the effect of reducing the income gap between urban and rural residents.Then,when the financial development level reaches the second threshold,there will be a reverse effect.The higher the level of financial development,the greater the income gap between urban and rural residents.In addition,there are some influencing factors in the level of financial development in the region and the changes in the relationship between the two.The contribution of this paper is that,first,from the perspectives of financial aggregation,urbanization,poverty reduction,threshold effects,and non-equilibrium effects,to analyze the mechanism of financial development and urban-rural income gap.The entry point is relatively novel.Secondly,a threshold-regression model was established to determine the double-threshold effect between financial development and urban-rural income difference,also analyzed and tested.Then,the urban-rural income gap subarea was regressed to study the impact of interregional financial development on urban-rural income gap.