Study On The Relationships Evolution Of Financial Capital Agglomeration And Urban-Rural Income Gap

The ratio of urban and rural income has highly been more than"3", with undergoing an inverted "U" shaped development path since2002. In2013, the farmers’ income increase achieved "ten continuous fast" for the first time since the reform and opening up, while the ratio of urban and rural income realized four consecutive years of decline. However, the income gap between urban and rural areas is still far higher than most countries’level of1.5:1. The problem of urban-rural income gap under Chinese national conditions is still very prominent. At the same time, the non-equalization of urban-rural financial development, especially the growing marginalization of rural finance, with the emergence of major commercial banks to withdraw from the rural areas, the allocation of resources to be excessively non-agricultural exacerbated the imbalance of urban-rural financial capital agglomeration, which undoubtedly has set an obstacle for narrowing the income gap between urban and rural.Based on the above realistic background, this paper focuses on the relationships evolution between financial capital agglomeration and urban-rural income gap. Firstly, by sorting out the research on financial development and urban-rural income gap at home and abroad, this paper systematically reviews and learns from several theories, such as theory of financial capital, theory of financial development, theory of economical agglomeration, theory of income distribution, theory of evolution economics. It has defined the basic concepts of financial capital agglomeration, urban-rural income gap and so on, explored the measurement of financial capital agglomeration index, and then reviewed the inherent impetus, the external conditions, the operating modes and the evolution mechanism, and set up a two-sector model of the impact on urban-rural income gap by financial capital agglomeration. Based on this, with the method of history analysis and econometrics and the1978-2011provincial panel data, the paper has inspected the relationships between financial capital agglomeration and urban-rural income gap dividing by periods and regions, and at last put forward the related policy implications based on the conclusions.Basic conclusions are:(1)The theoretical analysis shows that as a form of financial capital movements, financial capital agglomeration has the meaning of both dynamic and static. From a dynamic perspective, it is a process of financial capital to be non-equilibrium of spatial and temporal movement and regional aggregation; from a static point of view, it is a state of financial development with a certain scale and intensity which is reached through time and space to gather and polymerize. Evolution of financial capital agglomeration is that financial capital coordinates, configures and integrates with geographical environment and conditions to form temporal pattern of financial capital over a long period, leading by profit-driven mechanism and following the law of movement in some geographical space. Due to differences in each period, the regional objective of economic, social, historical and so on, spatiotemporal evolution among different regions of financial capital will inevitably lead to non-equilibrium distribution pattern of financial capital agglomeration.(2)The empirical results show that in general there is a significant positive relationship between financial capital agglomeration and urban-rural income gap, and financial capital agglomeration mainly makes impact on urban-rural income gap through direct effects. Its indirect impact on urban-rural income gap through economic growth has an obvious lag.(3)Because of different geographical environment, economic and social condition, political factors and marketing factors in different periods or regions, the degree of financial capital agglomeration is different, thus making its impact on urban-rural income gap is different. Their relationship has an obvious period and regional characteristics. In urban-rural income gap narrowing stage, the positive role of financial capital agglomeration is prominent; while in widening stage, it can only play a limited reverse role. Regional differences between financial capital agglomeration and urban-rural income gap are:the effect in eastern and western regions is significant, but the west one is more sensitive, and the impact in central region is not significant.Based on the conclusions, this paper makes some related policy suggestions as follows:(1)Accelerate rural financial legislation. We should make the guarantee for "three rural" investment, rural credit system and rural micro-finance’s regulation rise to the level of laws and regulations, to provide a good legal environment and institutional guarantee for financial capital to agglomerate to rural areas.(2)Adjust and optimize city’s financial institutions. They can be implemented some "lenient in limit out" for rural services. We should not only to promote the city’s financial institutions to play a rural service functions, but also to have the city’s financial institutions develop in coordination with the rural ones.(3)Reconstruct rural financial system. In terms of rural financial institutions, we should adjust and improve the existing rural financial institutions, while cultivating new rural micro-finance institutions, to meet the diversification, different levels of rural financial needs, and establish cooperative agricultural insurance agencies to deal with agricultural inferiority and cover agricultural insurance blank. In terms of rural financial markets, we should gradual develop rural capital market, and establish futures market of rural products.(4)Innovative rural financial products and services. We should innovative rural credit products and rural intermediate services according to rural financial needs and its risk characteristics.(5)Strengthen government’s guidance on rural financial capital agglomeration. Our government should actively guide financial capital to agglomerate to rural areas, supporting for the growth of farmers’income. But the more important is to adjust the thoughts. When setting policies, we should do to analyze specific issues, varying from time and place. We also should take multiple measures to improve rural location disadvantage, but to abandon the theory "only financial development first", and to implement differentiated regional regulatory policies and strategies.Our innovative points are:(1) New perspective. We introduce financial capital agglomeration in the analytic framework of urban-rural income gap, to test the relationships between China’s urban-rural financial capital allocation differences and urban-rural income gap, which provides a theoretical basis and empirical support for developing related policies, optimizing allocation of financial capital between urban and rural areas and narrowing urban-rural income gap.(2) Comprehensive content. We have grasped the evolutionary history of our country’s financial capital agglomeration and urban-rural income gap, and did some empirical analysis and comparison in sub-period, sub-regional with the relevant data.