The Analysis And Research Of The Financial Development And Urban-rural Income Gap

The improvement of living standard is a great event, relating to the stability of society and the development of nation. Income of urban and rural residents is a vital factor for people’s life, so economists and authorities have pay much attention to study this subject. Many kinds of theory was used to research income distribution, but the relationship between financial development and income distribution had been investigated from1990s. Thus, it belongs to a rising subject in financial field. We can find a regulation that financial development plays an important role in income distribution. The improvement of financial market can boost economy, and people’s living standard can be benefit from it. This phenomenon has been validated in many areas. However, whether the development of finance can obviously reduce the gap of income in Shaanxi province, we need to study deeply. In order to increase people’s income and reduce urban-rural income gap, Shaanxi province has taken relevant measures by means of development of finance. Whether these measures are effective, we still need to investigate.Theoretic and proved methods are employed to analyze above question in this thesis. Firstly, the background and significance of this thesis have been introduced, as well as basic frame. Secondly, domestic and overseas literature about relationship between the development of finance and income distribution have been packed up and assorted briefly. The author also summarizes relevant theory and analyzes mechanism. Then, the author analyzes many kinds of statistical data and finds some characteristics about the development of finance and the standard of income in Shaanxi province. On this foundation, the author selects proper index besides financial factor, which influence income distribution. Furthermore, about the relationship between the development of finance and income gap of Shaanxi province, author have taken metric measures to analyzes empirically, such as VAR model, impulse response function, variance decomposition and Granger causality test. Some conclusion can be gained by actual demonstration that development of finance can reduce the income gap in Shaanxi province. But it needs time to play its role. The last, author brings up some suggestion for development of finance and reduction of income gap.