A Study On The Relationship Between The Rural Financial Development And Urbanization In Hunan Province

Urbanization is the greatest domestic demand of China, and becomes potential power of Chinese current economic growth. Urbanization can eliminate the dual effect brought by our country’s dual economy. And it is also the main solution of the problem of agriculture, rural development and farmers. On the other side, the rural financial development is one of the most important factors in promoting urbanization. Therefore, there will be a powerful practical significance of studying the interactive relationship between the development of Hunan province rural finance and the urbanization.Firstly, this paper combs the related documents of financial development and urbanization from the scholars at home and abroad, based on this, this paper briefly expose the related theories of financial development and urbanization, and forms the framework of the transmission mechanism of the relationship between financial development and urbanization. It systematically analyzes the current situation of rural financial development and urbanization in Hunan, and points out the problems existing in the process of urbanization. Through establishing VAR model, then with the relationships of Hunan province rural financial and urbanization from 1988 to 2013, this paper make the empirical analysis of the interactive relationship between the rural financial development and urbanization, from three aspects--population urbanization, industrialization urbanization and society urbanization.The empirical results indicate the existence of long-term cointegration relationship between rural financial development and urbanization of Hunan province. The efficiency of rural financial development plays the largest role on the processing of urbanization in all the three rural financial development indicators, the influence of rural financial development scale in the next place,in that the structure of rural financial development in the last. The promotion of urbanization to the rural financial development is mainly reflected in the favorable external environment provided by the urbanization.Finally, this paper puts forward some suggestions of rural finance and the coordinated development of urbanization based on the rural financial support of the advancement of urbanization. Urbanization development provides a good opportunity of development for the rural financial industry in view of the empirical conclusion.