Inner Mongolia Rural Financial Development And Economic Growth Relationship Study

As a large agricultural country, the problem of agriculture, rural areas and farmers is always a major economic and social development issue in China. The economic development of Inner Mongolia is also facing its challenge. As an important factor influencing pastoral and rural economy, rural finance should exert sufficient driving forces to support the rural development by enhancing the operational efficiency through reform. The rural financing institutions reforming has become a key part for the current development, which also provides a good opportunity for the theory research.As the development of economic theory has always been closely linked with the economic practice, the rural financial system has taken shape in the Inner Mongolia Autonomous Region after 30 years' development. It is led by official institutions, including commercial, policy and cooperative financial organizations. However according to the previous practices, the current rural financial system in Inner Mongolia did not provide adequate support.A large number of financial resources motivated by profit-maximising philosophy have been reallocated to the cities or eastern regions rather than provide the credit service for the individual economy and township enterprises in the rural areas by the Agricultural Bank of China and the Postal Saving Bank, which is known as the "pump effect". By reviewing the development history of the rural finance in Inner Mongolia, the paper will analyse its current development degree and make the research on the relationship between rural finance and rural economic growth. The empirical study of the relationship between financial development and economic growth in the rural areas of Inner Mongolia will be constructed by using the rural credit-output ratio, output rate of agricultural investment, etc. This paper is aimed to answer what kind of influence the finance has taken on the economic growth. Furthermore by using the idea of establishing financial system project, the corresonding suggestions will be made for how to match and optimize the rural financial markets, financial institutions and financial products efficiently in the rural areas of Inner Mongolia.