Empirical Analysis On The Relationship Between Sichuan Rural Financial Development And Farmers’ Income Growth

It is generally accepted that properly dealing with the issues concerning agriculture, countryside and farmers, to some extent, are decisive for the sustainable economic development and social stability in China. And then, improving farmers’living standard and accelerating the growth of their revenue, which lie in the prosperity of China’s rural economy, are critical for properly dealing with the issues concerning agriculture, countryside and farmers. At last, prosperity of China’s rural economy could not be realized without the support of rural finance.However, current rural financial system in China is difficult to meet the demand for boosting the growth of rural economy. As a consequence, the improvement of farmers’living standard and the growth of their revenue have been inhibited accordingly. Solving farmers’revenue is the key to rural area. On this account, it is safe to state that the current rural financial system in China should go through deepening reform.Because China has a vast area, and the economic development degrees of its different regions vary greatly. Therefore, while formulating a strategy to improve rural financial system of a certain region, it is a necessity to take the local conditions into account. In this thesis, our discussions are mainly on the rural financial development in Sichuan Province and its relations with the growth of farmers’revenue.As a major agricultural province in China, Sichuan is one of the provinces implementing rural financial system reform very early. Through several years’ reformation, its rural finance has been the main force of promoting the rural economic development and growth of farmers’revenue. As for the present study, it would not only provide a theoretical basis for the rural financial system reformation in Sichuan Province, but also enrich the theoretical study on China’s rural finance. In comparison with previous studies, the present research is distinctive by taking Cobb-Douglas production function as the basis to build a mathematical model for delving into the relations between the financial development in Sichuan rural area and the growth of Sichuan farmers’ revenue. Firstly, according to the actual and specific conditions of Sichuan Province, two key rural financial indexes (i.e. efficiency index and scale index of rural financial development) indicating the growth of farmers’revenue are selected. And then, another two variables (i.e. purchasing price index of agricultural products and rural employment structure) which could positively predict the growth of farmers’revenue are also introduced into the model.This thesis consists of five chapters. Chapter one is the introduction, in which the research background, objectives and significance of this thesis are given firstly, and then the related previous studies at home and abroad are reviewed. At the end of this chapter, the writing thought and methodology are elaborated.Chapter two gives an overview of the theories which provide rationale for the empirical analysis in chapter four. At the beginning of this chapter, the rural financial development theory is introduced. And then, the process of China’s rural financial is reviewed. Finally, this chapter is ended by reviewing the farmers’ revenue theory is reviewed.In chapter three, discussions are mainly on the current situation of Sichuan rural financial system and the local farmers’revenue statement. In the first part of this chapter, we probe into Sichuan’s rural financial system from its two dimensions i.e. formal financial institutions and informal financial institutions. It is found that the current rural financial system in Sichuan has already been not capable of assisting in dealing with the issues concerning agriculture, countryside and farmers properly. In the second part of this chapter, firstly, a trend analysis is conducted on the net revenue of Sichuan framers based on the data from1990to2010. Secondly, in comparison with Sichuan farmers’net revenue in1995, it is found that there is a large structural change of that in2009, and then causes of the very large structural change are also explained finally.In chapter four, an empirical analysis is conducted on the relations between revenue growth of Sichuan farmers and financial development in Sichuan rural area. In the first place, the assumption and data index are described, this paper selects the required data index, including the farmer income index; efficiency index and scale index of rural financial development; purchasing price index of agricultural products and rural employment structure. Secondly, through the deformation of the Cobb-Douglas function and the farmers’income-related data from1990to2010, this paper carries out an econometric regression analysis. The results show the five variables is a single whole order. Then the five variables are proved to be co-integration relationship through the unit root test. And then, Granger causality test proves again the indissoluble between the Sichuan rural financial development and farmers’income growth. At last, this paper gives a detailed description of the empirical of the model.Based on the discussions in the above chapters, we can see that there are still some problems in the process of improving Sichuan rural financial system and the accelerating the growth of Sichuan farmers’revenue. Therefore, in chapter five, according to the actual condition of Sichuan Province, several policy suggestions are put forward as follows:①perfecting the rural financial service system;②providing innovative financial products;③improving rural financial policies;④building a suitable environment for the development of rural finance...