The Study On The Relationship Between Financial Develpoment And Income Distribution In Shandong Province

Since 1990, many economists have engaged in research on financial development, income distribution ande the relationship between the two. A growing number of scholars believe that the financial development can influence income distribution through various channels. In theory, Study is divided into two main parts: one is inverted "U" relationship between financial development and income distribution gap represented by Greenwood and Jovanovic; the other is linear hypothesis represented by Banerjee, Newman and Galor, Zeira. In empirical research, many scholars at home or abroad obtained a variety of different conclusions based on different regions, different time span of the data, why there is such a different conclusion is still pending.This study will be based on the existing theories and empirical studies, and explore the relationship between financial growth and income gap in Shandong Province. The main idea is to show income inequality of Shandong by the statistical data, to explore the reasons for the income gap in two ways at first; then to analyze influencing factors related with income gap and the dynamic relationship between income distribution and financial development; Finally, this study propose policy recommendations, which can solve conflicts between financial development and income distribution. This paper follows the theoretical analysis, empirical research, factors of three parts expand, the use of literature analysis, theoretical interpretation and quantitative analysis methods combined. We select the data of Shandong in the 30 years 1979-2008, using statistics data provided by Shandong Province Bureau, survey data since the reform and opening up.The main conclusion is based on full exploration. The main features at the present stage is the interrelated and mutually reinforcing between incomplete financial development and unequal income distribution. Through data modeling and analysis, this paper revealed financial development and income distribution relationship from four aspects: long-run equilibrium relationship, long-term causal relationship, short-term mutual impact relationship, short-term causal relationship. The increase of the financial scale, financial structure tilting to the expansion of agriculture widens income distribution gap in Shandong Province. Meanwhile, the increasing income gap promotes the development of the financial scale. Financial scale increases in the short term widens income distribution gap, income distribution gap in the short term lead to the improvement of financial efficiency, financial structure tilting to agriculture. Financial development is still at a low level stage but the income distribution gap has been relatively high, both of which need to be adjusted. Only from the incomplete nature of financial development, the equilibrium relationship between the two and changing the causal relationship between the two ,can we promote finance development while improving income distribution.Overall, this paper can be divided into six parts:PartⅠ: Brief background, this paper reviewed the theoretical and practical significance, and illustrates the idea of this research process, method, focus and innovation.PartⅡ: Cited financial development and the relationship between income distribution theory to explain financial development at home and abroad in Shandong Province and the relationship between income distribution, the theoretical and empirical research findings, financial development and income distribution and lack of experience.PartⅢ: Shandong Province macroeconomic, financial development, income distribution, general analysis of the current situation and found that financial development indicators and indicators of changes in income distribution is similar to speaking from experience, income disparity, respectively, in the long term financial development with the expansion of the scale, efficiency reduction, increase the proportion of agricultural loans are positively correlated. Incomplete financial development and income inequality in the distribution of interrelated and mutually reinforcing, Shandong Province at the present stage of financial development and income distribution, the main features.PartⅣ: Financial Development in Shandong Province, income distribution and economic growth indicators for modeling and analysis, detailed information hidden in data mining, the analysis confirmed the general conclusions. Promote financial development will further expand the income gap, and narrow the income gap will limit the development of the financial industry, but is still in Shandong Province at a low level of financial development stage, income distribution gap has been relatively high, both of which need to be adjusted, it became Shandong Provincial financial development and income distribution adjustment problems.PartⅤ: Shandong province relationship between financial development and income distribution to summarize the impact of factors, including the incomplete nature of financial development, political and economic factors and socio-cultural factors in three aspects, which is to break the negative financial development and income distribution, the key to a balanced factors. Considering these factors, further financial development in Shandong province and provide policy recommendations to adjust the income distribution.PartⅥ: This paper summarizes the conclusions and shortcomings, and provides recommendations on relevant further research.