Research On The Influence Of Rural Financial Development On Farmers’ Income Growth In Hunan Province

The problem of“Three Agriculture”is always a major problem in the processof Chinese economic development and social progress. Increasing farmers’income isthe key to solve the major problem of“Three Agriculture”in which“farmer”isthe core link. Farmers’income growth largely depends on the development of ruralfinance. Hunan province is one of the main agricultural provinces in China, which isalso one of the earlier provinces to implement the rural financial system reform. Aftermany years of reforming, Hunan’s rural financial sector has become an importantforce to promote rural economic development and increase farmers’income. Hunan’srural financial reform has achieved great accomplishment and increased farmers’income since the reform and open policy. However, the repressing of rural financialand decreasing of whole function of the financial system have hindered Hunan’s ruralfinancial reform, what’s more，the rural financial service system can hardly meet thedemand of rural economic development and social progress. It is an important reasonin recent years that the economic gap is enlarging constantly between the low growthof farmers’income and the high growth of citizens’income. Therefore, the researchon the factors of financial effect to Hunan farmers’income increasing can not onlyprovide theoretical basis for Hunan financial reform, but also further enrich Chineserural financial theory.This paper analyses the function of allocation resources and influence farmers’income growth in rural financial system, which based on current situation of Hunanrural financial development. According to the Hunan rural financial development andrural economic growth characteristics, through using the VAR model，the paperanalyses the three sub-trades how to impact on the growth of Hunan farmers’incomeand economic sectors from the angle of rural financial development scale andefficiency. Through the unit root test, cointegration test, Granger causality test,impulse response function and Grainger variance decomposition analysis: Hunan ruralfinancial development and farmers’ income growth have long term equilibriumrelationship, and Hunan rural financial development scale, efficiency and Hunan netincome of farmer average per capita which have bidirectional Grainger causal relation,the development of financial industry structure is not the Grainger reason of netincome of farmer average per capita, but the three indicators’joint action is the Grainger reason of the rural per capita net income growth, this indicates that theHunan rural financial development affected the growth of farmer income in a certainextent, but the potential of the current Hunan rural financial development whichsupport increasing the farmers’income have not fully played out; through graycorrelation analysis and prediction, the paper obtains the sorting of dynamicsassociated factors and the development trend which have some correlation withfarmers’per capital net income and three sub-trades of rural financial industry.Based on the theoretical analysis of Hunan rural financial development and theempirical analysis of rural financial development improving farmers’income, thispaper proposes some suggestions to boost farmers’income from following aspects:adopting some measurements to further reform in rural financial sector, furtherimproving the agriculture insurance mechanism, strengthening the power of financialsupport policies to the agriculture, regulating the development of rural informalfinancial sector, guiding it to play its effective complement function and othermeasures, further improving the organization system of sub-trade in the rural financialindustry, and improving the function of rural financial market.