On The Mechanism Of Rural Financial Development On Rural Economical Increasing

With 30 years'development of reform and opening-up, China's economic aggregate has achieved the second place in the world. China has become an economic power. However, China's economic structure is still not reasonable; the regional development differences are sharp; and the economy developments in rural areas still lag behind, which are important factors afftecting the process of China's becoming an economic power in the future. Therefore, how to develop and expand the rural economy is of critical importance for China's construction of well-off and harmonious society. The development of the rural economy is a systematic and complex engineering. There are a variety of conditions and factors contributing to the development of rural economy. Among them, the development of rural finance is an important supporting factor and condition. Based on this, this paper probes into the relationship between the rural financial development and the rural economic growth and has a deep analysis on the mechanism of the rural financial development to the rural economic growth in order to promote the research on the establishment of a rural financial system of reasonable scale, optimized structure and high efficiency, and the rural economic growth.By mainly applying economic growth theory, modern finance theory, institutional economics theory and other economic theories, this paper has a systematic research on the mechanism of the Chinese rural financial development to the rural economic growth, tries to discover the existing problems in the current Chinese rural financial development and factors that weaken the contribution of the rural financial development to the rural economic growth and puts forward constructive countermeasures to further boost rural financial reform, improve the financial efficiency and optimize the allocation of resources.This paper is divided into nine chapters:Chapter one, introduction, has an analysis of the research background and significance, research thoughts and frame, research methods and innovation. Chapter two, literature review, is a narration of the researches related to the economic growth, the relationship between the financial development and the economic growth and the relationship between the rural financial development and the rural economic growth. Chapter three has an analysis of the relationship of the status quo of China's rural financial development and the rural economic growth by adopting time series analysis approach, which lays the foundation for the following chapters. Chapter four is based on financial deepening theory and analyzes the mechanism of the rural financial development to the rural economic growth from theoretical and empirical research and also analyzes the restricting factors for the rural financial development. Based on the endogenous economic growth theory, chapter five and chapter six have theoretical and empirical research on the mechanism of the rural financial development to the rural economic growth respectively. With the case of Yongzhou city of Hunan province, chapter seven analyzes the mechanism of rural financial development on rural economical increasing. Chapter eight puts forward some targeted counter-measures for developing the effects of China's rural finance on the rural economic growth. On the basis of the summarization of research conclusions, chapter nine points out the boundedness of the paper and issues needed to be further explored.Through theoretical and empirical analysis, this paper covers the following conclusions:1. There exists a long-term equilibrium relationship among the rural economic growth and the development scale of the rural finance and the development efficiency of the rural finance. In such relationship, only the development scale of the rural finance is the Granger cause for the rural economic growth, whereas, the development efficiency of rural finance does little good to the rural economic growth.2. The mechanism of the rural financial development to the rural economic growth is as follows:the rural financial deepening can result in saving effect, investment effect and resource allocation effect, which can promote the physical capital accumulation, human capital accumulation and technical progress, and then quicken the rural economic growth. China has promoted the economic growth through generating and amplifying the saving effect and investment effect of the development scale of the rural finance. But rural financial development hasn't improved the efficiency of investment notably, therefore the effect of resources allocation doesn't work.3. Since the reform and opening up, the totality of China's rural financial assets is growing rapidly. But it's structure is unreasonable and the efficiency is not significantly improved. The effect of financial deepening on promoting the rural economic growth is also decreased. In addition, relationship between the efficiency of the rural financial development and the factors of the endogenous economic growth is in a reverse one, which shows that the efficiency of China's rural financial development is low.4. The institutional factors should be fully taken into consideration for the mechanism of the rural financial development to the rural economic growth. Government intervention will affect the rural financial development, while the rural financial development will also promote system evolution.5. The efficiency of the rural financial development needs to be improved by optimizing the structure of the rural financial development through reform.