The Impact Of Rural Financial Exclusion On Urban - Rural Income Gap

Since the reform and opening-up, the rapid economic development of our country, but regional development imbalances are still relatively common, the outstanding performance is the income gap between urban and rural areas. Finance is the core of modern economy.Narrowing the income gap between urban and rural areas is inseparable from the strong financial support. However, in front of our country is relatively common phenomenon:the face of increasingly complex and competitive financial markets, financial institutions in China business development center of gravity are mainly remain in the economy is relatively developed city region; In economic development is relatively backward rural areas, both outlets open network、financial services、or in terms of credit rationing,there are still more serious financial exclusion. "Unreasonable" allocation of financial resources in severely hampered the normal development of the rural economy, directly or indirectly slowing rural income growth, further widening the income gap between urban and rural areas.By using the methods of principal components analysis and multivariate panel data model, we give a comparative study on the effect mechanism and the results of effect between rural financial exclusion and urban-rural income gap in China’s various provinces.We conclude that the mechanism is obviously different in different urban-rural areas. The impact on urban-rural income gap from rural financial exclusion is the most significant and at the highest level in the eastern provinces, while it is not obvious in the central and western provinces. The policies to narrow income gap between urban and rural should be adapted to local conditions. Commercial finance and banking support measures should be taken in relatively developed rural areas, while fiscal measures will be better in underdeveloped rural areas.