Research On The Relationship Between Unbalanced Development Of Financial Industry And Urban-Rural Income Gap

After more than20years’economical reform, Per Capita GDP in China sustains high growth, the financial sector develops from nothing to be a bank-oriented financial system. However at the same time with the economy achieving high growth, financial industry takes gradually on unbalanced development such as gradient development of financial market ratio among east, middle and west areas in China, oligopoly market structure kept by state-owed banks on asset market share, distinct area coverage of security industry, insurance depth and density much lower than international level. The financial system in the allocation of resources displays the obvious tendency of urbanization, and the rural finance develops by lag with lower efficiency in the allocation of resources, which has made a large income gap between urban and rural area and exceeded the level of international red warning line. The shortage on financial intermediaries and financial resources flowing into urban explain the internal mechanism leading to large income gap between urban and rural area.Throughout literatures on financial development, economical growth and income distribution, relationship between financial development and economical growth has been given much focus in contrast to that between financial development and income gap, consequently it has a great practical and theoretical significance to make clear relationship between financial development and income gap.This paper reviews the shortages of current relevant literatures and its further research from four aspects such as index selection, theory application, research methods and contents. On index selection, measurement on size of finance covered bank, security and insurance. On theory application this paper compared the mechanism under general market-oriented economy and dual economy. On methods, this paper adopted the estimation of both difference GMM and system GMM with IV to estimate robust parameters according to the principles of experimental design. On contents, financial asset structure variable was introduced into the model to make up the blind spot in current literatures.Results of positive analysis reveals inverted U relationship between financial size and income gap is unverified, and also the effects of industrial size, industrial efficiency and expanded Kuznets are unverified based on the sample interval; Development of financial size has reversed moderating effect on relationship between industrial structure and income gap; To optimize financial asset structure and enhance financial development efficiency have the effect on reducing income gap between urban and rural area. Consequently to enlarge the size of non-banking financial industry and raise the ratio of deposits to loans in financial intermediaries have a positive significance to narrow the income gap.