An Empirical Research On The Relationship Between County Financial Repression And Farmers' Income In Zhejiang Province

With the reform and opening up,China's agriculture and rural economy have achieved rapid development.However,there are still a series of problems in the process of rural financial reform and development,such as the supply of rural credit provided by financial institutions is insufficient,severe capital outflow,and other problems of financial repression.This is accompanied by the urgent need to improve the level of livelihood security in rural areas,and we will continue to work hard to effectively attack poverty and narrow the income gap.Financial repression has different effects on the income condition of different residents through capital allocation,and to promote the increase of residents' income and improve income distribution cannot be separated from financial capital support.Therefore,it is of great significance and necessary to achieve targeted poverty alleviation in rural areas and improve income distribution through the improvement of financial repression.The impact of financial repression on rural household income has both direct effects on restraining growth and indirect effects on promoting growth.In residents' income activities,the above two effects exist simultaneously,and in different economic environments and development levels,different effects have different sizes.Therefore,how the rural financial repression affects the income of rural residents needs to be supported by theoretical models and empirical results,The results will vary according to the characteristics and level of economic development in different regions.This paper mainly studies the impact of financial repression on rural residents' income in zhejiang province.First of all,this article makes theoretical reasoning on the direct and indirect ways of financial repression affecting residents' income,and on this basis,give a description of the financial development of zhejiang province and the rural residents' income situation.Based on the previous research on financial repression and the objective situation of the development of county finance,eight variables of four dimensions were selected and the indicators of county finance inhibition in zhejiang province were measured by principal component analysis.Finally,this paper used the panel fixed effect model to study the impact of county financial repression on the increase of farmers' income and the income gap of urban-rural.And the quantile regression model with fixed effects is used to investigate how county financial repression acts on the rural income gap.The empirical results of this paper show that the degree of financial repression in the counties of zhejiang province has been decreasing in recent years,and such financial development has significantly promoted the income growth of farmers and narrowed the income gap of urban-rural.The reduction of financial repression has improved the situation that most rural financial resources were allocated to more efficient cities and towns in the past,so as to meet the living and production needs of farmers and increase their income,and at the same time bring about the narrowing of the urban-rural income gap.However,it had a growing effect on the income gap in rural areas: with the improvement of the quantile,the alleviating effect of financial deregulation on farmers' income will be enhanced continuously.This contradicts existing literature based on studies at the national level.Clearly,this change in income distribution showed in zhejiang province is a natural result under the background of it's relatively developed market economy and private economy.Relaxed financial repression reduced rural capital outflows,therefore the availability of financial resources within rural areas increased.This will make it easier to meet the financial needs of farmers in relatively wealthy counties.Individual differences emerge,then has certain enlargement effect to the rural interior income gap.In addition,the explained variables in the above study were also influenced by such factors as government fiscal expenditure,fixed asset investment and industrial structure.Among them,the government's fiscal expenditure had a remarkable effect on promoting the income growth of residents and narrowing the income gap of urban-rural.Investment in fixed assets could effectively increase farmers' income.The industrial structure had a significant effect on promoting the increase of farmers' income and narrowing the income gap of urban-rural.Based on the above research conclusions,this paper puts forward some policy suggestions to relax financial repression and other measures to improve rural residents' income.There are two aspects of innovation.Firstly,from the perspective of financial market,this paper studies the relationship between rural financial repression in county regions and rural residents' income.Much from international level and national level in the literature study of farmers' income or the income gap.This article do the digging and supplement in this aspect,and different conclusions are obtained from the national level study.Secondly,this paper makes innovations in the selection and measurement of variables.A large number of domestic research used a single index like the maximum or minimum deposit and lending rates or balance of deposits and loans of financial institutions to measure financial repression.Or it can only reflect the characteristics of a certain aspect of finance.Based on the method of Demetriades for reference,this paper uses the principal component analysis method to synthesize the county financial repression index,in an effort to make the variables more accurate and more representative.