The Impact Of Financial Development On Urban-rural Income Distribution

Since China's reform and opening up,China's financial industry has developed rapidly,which is highlighted by the rapid growth of total financial assets and the comprehensiveness of the financial system.At the same time,China's economy is also growing rapidly,and its GDP growth rate has remained at the forefront of the world.Behind the rapid economic growth,the gap between the income level of urban residents and rural residents in China is gradually widening.The phenomenon of excessive income gap between urban and rural areas in China has become a problem that cannot be ignored.The problem of excessive urban-rural income gap is very likely.Affect the quality of economic development and produce many undesirable social problems.Financial development can promote economic development,but it will also have an important impact on the distribution of national income.Therefore,studying the impact of financial development on the income gap between urban and rural areas can improve China's urban-rural income gap from a new perspective.With regard to the relationship between financial development and urban-rural income gap,foreign scholars have studied more about the relationship between financial development and income inequality throughout the country,and foreign scholars have three different conclusions about the relationship between financial development and the country's income gap.For Chinese scholars in the study of financial development and urban-rural income gap,there are also the same problem,that is,the relationship between financial development and urban-rural income gap in China may be positively related,negatively correlated,or inverted U-shaped relationship.In order to study more deeply the relationship between financial development and urban-rural income,this paper,based on the previous studies,has analyzed in detail the theoretical mechanism of how financial development affects the income gap between urban and rural areas.The theoretical mechanism of the three effects from financial development Analysis,in which the poverty reduction effect of financial development is conducive to narrowing the urban-rural income gap,and the threshold effect and non-equilibrium effect will expand the urban-rural income gap.In the empirical analysis,this paper selects variables that measure the level of financial development,using financial institutions' total deposits and loans as a percentage of GDP as an indicator of financial development,and using financial institutions as a percentage of deposits as a measure of financial development efficiency.The data selected in the empirical study of this paper is the national provincial panel data from 2005 to 2015.After empirical analysis,the following conclusions have been drawn: China's financial development scale(FD)has expanded and expanded;China's urban-rural income gap will decrease with the increase of China's financial development efficiency(FE).Combining the analysis of theoretical mechanism and empirical analysis of the previous article,we find that financial development will have a major impact on China's urban-rural income gap,with the impact of financial scale being more pronounced.In order to improve the current urban-rural income gap in China,we propose policy recommendations in the following areas: We must vigorously promote the expansion of financial development on the margin,promote financial democratization,and improve the status quo of China's financial development only by a small number of people;At the level of the rural financial system,increasing support for “agriculture,countryside and farmers” and rural inclusive finance,financial services in rural areas compared to urban areas,financial supply can not keep up with the demand of rural residents for financial resources.Let savings be returned to the purpose of promoting the development of rural economy;regulate and encourage non-governmental finance,nongovernment finance can solve the financial needs of rural households with financial needs and the needs of township and township SMEs;accelerate the process of urbanization;urbanization will transfer rural surplus labor to cities.Provide more employment opportunities and income-generating opportunities for the rural population.