Financial Inclusion,economic Growth And Income Inequality

Over the past 40 years of reform and opening up,China’s economy has achieved rapid development,second only to the United States,and the quality of economic development has been constantly improved.But at the same time,the characteristics of the new normal gradually show that the problems of unbalanced regional economic development and higher income inequality in China are becoming more and more serious and difficult to be ignored,and the development of Inclusive Finance provides new ideas and ways to solve these problems.Since the concept of Inclusive Finance was first put forward in 2005,governments and world organizations have vigorously promoted financial inclusive and reduced financial exclusion.Although China formally introduced the concept of Inclusive Finance in 2006,due to the large differences in regional economic development level,high cost of financial services and geographical location,the development level of Inclusive Finance in many regions of China is still in a backward state.It is of great practical significance to explore how to improve the level of financial inclusiveness in China.In addition,although the relationship between financial development and economic growth and income distribution has always been the focus of academic research at home and abroad,the research on the mechanism of Inclusive Finance affecting income inequality is obviously insufficient,especially the empirical literature on the channel of Inclusive Finance affecting income inequality through economic growth is few.Based on the above realities,this paper,on the basis of the existing research results and from both theoretical and empirical perspectives,uses the research methods of qualitative and quantitative combination,empirical and normative combination to deeply explore the impact of Inclusive Financial Development on economic growth and income inequality as well as the mechanism of action,and from an empirical perspective,studies the effect of Inclusive Financial Development on economic growth and income inequality,thus slowing down by promoting economic growth.Based on the current situation of inclusive finance,income inequality and economic growth in different regions of China and the empirical results,this paper provides some policy recommendations to promote the development of Inclusive Finance in China.In the part of theoretical analysis,this paper starts from the relationship between financial development and economic growth,and analyses how inclusive finance affects economic growth;secondly,it introduces the related theories of economic growth affecting income inequality;finally,this paper discusses the direct mechanism,namely,reducing credit constraint effect,poverty alleviation effect and inclusive effect,as well as the indirect mechanism,that is,inclusive finance through economic growth.The "trickle-down effect" channel elaborates the impact of Inclusive Finance on income inequality.In the current part,we use the provincial panel data from 2006 to 2016 to measure the level of inclusive financial development,the degree of income inequality and economic growth in China by constructing the inclusive financial development index(IFI),the income inequality index(IG)and the economic growth rate(Growth),and compare the level of inclusive financial development,the degree of income inequality and the status of economic growth in different regions horizontally,vertically at different times and internationally.The development characteristics of China’s three major indexes are analyzed.In the empirical analysis part,this paper uses fixed panel model and system GMM model to study the relationship between Inclusive Finance and economic growth and income inequality in turn,and emphatically explores the mechanism of Inclusive Finance affecting income inequality through economic growth.Through the construction of a dynamic model between inclusive finance,growth and inequality and empirical analysis,it is found that Inclusive Finance is conducive to alleviating income inequality,but the channel of economic growth is not smooth at present.Finally,combining with the actual situation of our country and the conclusions drawn in this paper,the paper puts forward four policy recommendations to improve the development of Inclusive Finance in China.One is to improve the macro-policy,legal and regulatory environment;the other is to establish an efficient and sound financial infrastructure;the third is to strengthen the supply-side reform of inclusive finance;and finally to improve the matching of financial services supply and demand.