Rural Financial Development And Rural Economic Growth Relationship Study

Agriculture is the foundation of national economy. The development of rural economy is the first priority in China's economy. How to promote rural economy by rural financial development is a hot topic in the rural economy field. The paper aims at finding out problems and deficiencies in rural development through analysis of relationships between rural development and economic growth in Shandong Province, Thus we could give some suggestions on rural financial reform.The content of this paper includes:Firstly, the paper reviews the predecessors' document research and get some important information from them. Then we will have a brief introduction of the actual fact of financial development and the economic growth. Factors affecting the rural financial development mechanism are also summarized. In addition, the paper verified the above mentioned problems through empirical analysis which includes building a general financial development index through AHP method, researching on the relationship between rural financial development and rural economic growth in Shandong from vertical and horizontal side through OLS method combined with chow breakpoint test. Finally, we give out suggestions on how to solve the above mentioned problems.We concluded that rural financial development prompt rural economic growth in general, however such promotion rate has reduced. The reason lies in deficiencies existing in rural development. So we need to improve the financial development mechanism in all respect.