Research On The Urban-rural Income Gap Based On The Financial Development In Anhui Province

More than30years of reform and opening up, the economic in Anhui develops rapid; the income levels of urban and rural residents has made improved significantly. But relative to the level of economic development in Anhui Province, its financial development appears to lag behind, the gap between urban and rural residents’ income level is also widening. With the deepening of reform of the financial system, financial development hold more and more important status in the process of economic growth. The problem of financial development and the urban-rural income gap has attracted enough attention. Combined with the actual situation, the research do normative and empirical analysis on the income gap between the urban and rural based on the perspective of financial development in Anhui Province.This research describes the theory of financial development, income distribution and the relationship between the two, and it explores in the mechanism of financial development on the urban-rural income gap. Combined the situation of Anhui Province and based on threshold effects, non-equilibrium effects, poverty reduction effects of financial development, study three possible effects aboue the impact on the urban-rural income gap of Anhui Province, threshold effects and non-equilibrium effects can widening the income gap; poverty reduction effects can narrow the income gap. The paper analyses the situation about the financial development and the urban-rural income gap in detail. In the case of financial development, the paper measures from four aspects of the financial scale, efficiency, structure, and secondary indicators of financial development in Anhui Province, while analysing the problems in the financial development in Anhui Province. In the case of the urban-rural income gap, the paper analyses the amount and source of income about the urban-rural income gap in Anhui Province, and measure the income gap between urban and rural two group with the ratio about urban-rural percapita income and the Theil index, as an important indicator to measure urban-rural income gap. Combined with the rise of central China in the new situation, a comparative analysis of the urban-rural income gap between Anhui Province and the middle five other provinces, the problem of the urban-rural income gap in Anhui Province is more severe.Based on the specifications and data analysis, financial development is divided into three aspects:the scale of financial development, the efficiency of financial development, the structure of financial development, and add to economic growth, the degree of urbanization variable, use multivariate vector auto regression model on the relationship between financial development and the urban-rural income gapinspection. The model involvs six variables:Anhui Province’s financial scale, financial efficiency, financial structure, economic growth, urbanization rate and urban-rural income gap. Its specific empirical research includs the stationary test, Johansen cointegration test, Granger causality test, impulse response functions and variance decomposition analysis. The results of the reaearch of the VAR model shows that Anhui Province’s financial development and the urban-rural income gap has a long-term stable relationship, and the scale, the structure of financial development have a positive impact on the urban-rural income gap, but the efficiency of financial development, economic growth, the urbanization rate and the income gap have the reverse relationship. Granger causality tests shows that the scale and the structure of financial development does Granger cause the urban-rural income gap, the efficiency of financial development does not the Granger cause the urban-rural income gap, and the financial scale and economic growth have one-way causal relationship. The scale and efficiency of financial development widen the urban-rural income gap, and the scale is one effective way for economic growth in Anhui Province. The impulse response analysis revealed that the short-term changes of financial development will produce short-term significant positive impact on the income gap widening in Anhui Province, thus further widen the income gap; the results of variance decomposition show that the scale and structure of financial development can emerge more lager contribution for the urban-rural income gap widening in Anhui Province. Based on the above studies, this paper presents policy proposals about the financial development and related measures to improve the urban-rural income gap in Anhui Province.