The Study On The Relationship Between Rural Finanice And Rural Economic Development

The Studies on the Rural Finance Development and its working mechanism were of great significance of theories and practice, especially on the rural economic increasing as well as rural per capital income increasing. In the economic development, capital investment is the major factor. Due to this, increasing the capital investment to rural economic was undoubtedly an effective way to improve rural development. The real situation was that there was funding gaps in most part of China. Rural financial system could play an important role in providing financial support. Then how to use the financial system effectively to give adequate fund support is the basic thing that should be solved in short time. So to get the current situation about the development of rural finance, to master the working mechanism about how rural finance played the role in improving the rural economic development and to verify the relationships between the rural finance and agriculture would be helpful in solving these problems that we were facing.In this paper, taking Ganyu as an example and from the local situation, we established a theoretic framework to analyze the relationship between economic development and rural financial system, using modern economic theory, theory of financial development and other research methods. Then combined with the actual statistical data, we did empirical analysis, with the hope that it could give some scientific support to make finance policy formulation and institutional arrangements.This article is divided into six chapters, as follows:Part one is about the problem of research, background, literature review, the purpose and of the research.Part two includes relative theoretical basic as well as model description.Part three includes chapter 3 and chapter 4. In this part we firstly did descriptive analysis about the realities of rural financial development, development characteristics and problems. Then combined with statistical data, using empirical study, we verified relationship between the rural financial development and economic growth as well as the mutual influence between these two. With the results of these, we got the inclusions that in which stage the rural financial development of Ganyu was.Part four is the conclusions and policy recommendations for research.The empirical results show that:(1) Compared with total rural Deposits, the yearly growth rate of Agricultural Deposits is much smaller than that of total Deposits. Least squares regression shows the ratio of agriculture-related rural finance did significantly promote the increasing in GDP. At the same time, the ratio of agriculture-related rural finance did a significant contributes to the Rural per capita disposable income. There is a Grange cause relationship between the ratio of agriculture-related rural finance and rural per capita disposable income. Agricultural investment in fixed assets played a significant role in promoting agricultural economy as well as rural per capita disposable income. There were obvious Granger causalities between changes in interest rates and the ratio of agriculture-related rural finance. So did the rural finance investment in fixed assets. (2) From the empirical analysis results, we got the inclusion that so far the rural finance of Ganyu has been able to play the role of economic growth. Compared with the average level, the number of deposits and loans in agriculture are still small. It seems that most of the loan was invested to the non-agricultural fields, which can explain why rural finance could do positive work on rural per capita disposable income rather than agriculture economic growth.According to the empirical analysis of the actual situation, we propose the following recommendations:(1) establishing a suitable rural financial system that can adjust to local situation; (3) improving the management of rural finance, savings and insurance reserves; (3) promoting the establishment of rural financial market structure; (4) establishing a suitable policy environment for rural finance development.