An Empirical Study On The Influence Factors Of The Urban And Rural Financial Exclusion Difference In China

Finance as the core of modern economy has an important role in promoting thedevelopment of economy and society. Since the reform and opening-up, the urban andrural finance have some developments with China’s financial system continuing toimprove. The Agricultural Bank of China, Agricultural Development Bank of China,Rural Credit Cooperatives, Postal Savings Bank gradually become the main form ofChina’s rural financial system. Overall, the financial role in promoting China’seconomic growth is still limited, urban and rural developments are also exposed somefinancial problems, especially in the economically backward rural areas. The financialproblem is more serious, leading to financial exclusion that economic agents have thedifficulties in getting financial products and services from the nearest financialinstitution.Generally, financial exclusion is due to no suitable access to financial products andservices provided by mainstream financial institutions. It is a dynamic complexmulti-dimensional concept, not only related to the physical access exclusion but also theaccess exclusion, condition exclusion, price exclusion, marketing exclusion, andself-exclusion. At present, China has a widespread financial exclusion among theprovinces, autonomous regions and municipalities, as well as the extent of financialexclusion between urban and rural areas. Therefore, the study of financial exclusion hasthe support to problem of wealth gap, unbalanced development between urban and rural,extending the academic finance research dimension on financial development.In addition, financial exclusion is a subset of social exclusion extended in thefinancial sector. On the one hand, China is in a stage of sustained and rapid economicdevelopment, a number of socio-economic issues have been exposed, such asunbalanced development gap between the rich and poor,urban and rural areas. On theother hand, the government is vigorously promoting the construction of a new socialistcountryside, as well as human-centered urbanization. Therefore, the study of financialexclusion on China’s urban and rural areas has a great practical significance on theimprovement of China’s urban and rural financial system, easing the extent of socialexclusion and promoting sustainable economic and financial development.Based on the above analysis, this paper studies the degree and factors of financialexclusion from the perspective of urban and rural areas. First, by analysis of existing research, the article builds a four-dimensional evaluation index system of financialexclusion which uses principal component analysis. Then, using panel data between1995-2011of29samples, with the two-stage least squares estimation (2SLS) method, inboth the external environment and the individual, empirically analyses the factorsInfluencing the differences. The main conclusions are the following:First, the difference of China’s urban and rural financial exclusion is significant. Indual economic structure background, urban and rural economic growth imbalances,and the financial sectors varying, leads to growing differences between urban and ruralfinancial exclusion; Second, financial exclusion is geographic clustering.Overall，thefinancial exclusion problem of the eastern coastal areas is more significant than themidwest; Third, regional GDP, the investment in fixed assets, the age structure of theregion as well as the level of consumption of the four factors show a significant positivecorrelation with the exclusion, but the per capita expenditure, the proportion of thefemale population and the level of education are showing a negative significant impact.Finally, combined with the status of China’s urban and rural financial exclusion,the article makes recommendations in four areas: co-ordinate the development ofvarious regions and between urban and rural China; enhance the availability of regionalfinancial products and services; innovative financial products and services, strengthenfinancial literacy education; enhance government support, institutional strengthening,improving financial system.;and increase the supply of rural financial services.