Empirical Analysis Of China’s Rural Financial Development And Economic Development

It consists of two parts: in the first part we analyzed whether there is a relationshipbetween the rural financial development and economic growth in rural areas. To investigatethis we used the Granger causality test, the result indicated a reciprocal causation relationshipbetween them. In the second part, we investigated the feature of relationship between thedevelopment of rural finance and rural economic growth. Although it has been believed thatthey are related with each other but it has never been proved. In this section, a VAR modelwas used for the static analysis of the relationship between the dynamic impulse responsefunction and variance decomposition analysis.Based on the above analytical framework, this paper is divided into five major sections:First chapter is the Introduction section. In this section I introduced an overview of thebasic situation of rural finance and rural economy and explained the reason why I choose thistopic as my study; In addition, this chapter describes the content and framework of this thesis,and finally, to point out innovation and research methods in the article.The second chapter is the full text of the literature review section, further divided intofour parts. The first part is an overview of domestic and international economic growth theory;the second part is the overview of the theory of financial development and economic growth;The third part is about the literature review of rural finance and rural economic growth; Thefourth part is the enlightenment after reading of the literature.The third chapter focuses on this article requires the use of models and related data,further divided into two parts. The first part is an overview of the main variable selection andsample selection; The second part mainly elaborated a variety of theoretical models, including:Granger causality test (Granger, Causality Tests), VAR model (the Vector AutoregressiveModel), VAR forecast variance decomposition (Variance Decomposition), the impulseresponse function (of Impulse Response Function), then made a specific introduction on theuse of various theoretical models in the article.The fourth chapter is the analysis and results section, whic is also the core part of thisstudy and it is divided into three subparts. In order to prevent spurious regression and preventfrom influencing the accuracy of the model prediction and analysis, it is compulsory to dostationarity test on the time series data; The second part is the Granger causality test, and thethird part is the VAR Test.The fifth Chapter is conclusions and recommendations. First, although Shandong ruralfinance and rural economic development are positively correlated, Shandong’s rural finance did not significantly promote rural economic development. In Shandong Province, ruraleconomic growth plays important rols in promoting rural financial development, but the effectof rural financial development on economic growth in rural lag time long and the role is notvery obvious. Overall, the financial repression phenomenon is more serious in Shandong. Inthis chapter we made a number of policy recommendations on how to strengthen thedevelopment of rural finance: Firstly, actively expand rural financial markets, and graduallyformed the basis of state-owned financial institutions, policy-oriented financial institutions,joint-stock banks, coexistence of local small and medium-sized financial institutions, foreignbanks and other financial institutions, rural financial organization system; secondly, tostrengthen the financial infrastructure, improve the legal system, to enhance the Government’spolicy put into the rural financial system; thirdly, face up to the rural non-informal finance,rational guide its development. Fourthly, improve the agricultural insurance system, andcultivate the rural capital market.