Theoretical And Empirical Study On Urban-rural Income Gap Based On Financial Deepening

As the core department of national economy, finance has the fundamental and outspread effects on the development of economy. It has provided the convenient condition for the development while its contribution is increasing continuously. The essence of finance lies in optimizing the allocation of resources and promoting the equalization of income. Since 1978 , the financial system has been conducted deep-going reform. The financial market is becoming perfect with the diversity of financial instruments, maturity of system and increasing of monetary ratio. Meanwhile, the income gap between urban and rural area is becoming bigger and bigger, which has become the shackle of the construction of harmonious society. The paper aims at studying the urban-rural income gap, analyzing the influence mechanism and providing corresponding suggestions based on the financial deepening.Based on the research achievements of financial deepening and income distribution both at home and abroad, the paper combines the qualitative and quantitative analysis, and the main structure is as follows:Firstly, the paper analyzes the current condition of financial deepening and urban-rural income gap with the predecessor's indicator system. Compared with the classical financial theory, the process of the financial deepening has some commons, but also some differences. The financial department has obtained considerable development, but still suffers restraint. Since the reforming and opening, the urban-rural income gap is considered as"the wave". Currently, we are facing serious"dualistic structure".Then, at the basis of studying on the performance efficiency of financial deepening, the paper carries on the theoretical analysis of the influence financial deepening makes on people's income with the foundation of Ramsey model. As well, through the mechanism of"financial deepeningâ†'economic growthâ†'urban-rural income gap", the paper constructs the related modal. The empirical result shows that, with the development of finance, people's income between urban and rural area is increasing day by day.Next, the paper discusses the forming causes to the root of the interior of financial system. The overall financial markets has some features, such as the allocation of financial resources (including financial institutions and assets) is not balanced, the degree of the information asymmetrical is high, the financial instruments should be more varied, and so on. These elements has hindered the operation efficiency of financial system, and then affected urban-rural income gap. In addition, the rural financial market suffers serious restraint. Owing to the monopolizing of organization and backward of management, the rural financial market is unable to provide the diversified financial products and high-level service.Finally, based on the financial deepening, the paper proposed some suggestions for reduce urban-rural income gap. It mainly includes, improving the efficiency of financial system, building up the diversified rural financial system, promoting agricultural insurance and the neotype social security, etc.