Empirical Study Of Effect Of Financial Development On Urban-rural Income Gap In China

China’s economic performance over the past30years has been remarkable.It is a uniquedevelopment success story,providing valuable lessons for other countries seeking to emulate thisseccess.However, income disparity is also expanding, China’s Gini coefficient from the early1980swas0.28and increased to0.491in2008, although the Gini coefficient falls down in the followingyears it stills stays in0.474in2012.This data is higher than all developed and most developingcountries, far higher than the uneven social distribution cordon which is0.4.Finance as the core of modern economy, plays an important role for economic development, butalso for the residents’ income gap as a significant impact. In this paper, based on related theoreticalresearch, analyze relationship between financial development and the urban-rural income gap fromtwo prospects. At the first aspect, from the perspective of financial system reform, take the specialevent that China reduced the number of stated-owned banking institutions in1998as example,analyze the relationship between bank brunches, bank loans and urban-rural income gap. At anotherlevel, with the indicators of financial development scale and financial development efficiency,overview inverted U-shaped relationship between eastern, central and western financial developmentand urban-rural income gap. The main contents are as follows:The first chapter expounds the background of the thesis, the research significance, and researchstatus at home and abroad and the research content and methods. The second chapter is the summaryof relevant theories, including the basic concepts of financial development and income gap, andmeasurement, the theory of financial development affect income distribution. The third chapter is thedescriptive analysis of financial development and urban-rural income gap of China, use the monetaryindicators and the financial development indicators to measure the overall development of China’sfinancial status, use theil index to measure the current situation of the income gap between urban andrural areas, considering the regional imbalance, then measure the corresponding situation of the east,middle and west regions.The fourth chapter, use China’s reform of state-owned commercial bank branches in1998as thespecial events, combined with the economics of supply and demand theory, information theory andcompetition theory, build a provincial panel data model to analyze the relationship between bankbranches, bank loans and the income gap in urban and rural areas, found that bank branches is througha savings into investment to influence economic development and people’s life, not through investment efficiency. The fifth chapter, based on the theory of financial concentration analysis of theprocess of financial development in China, summarizes the four stages of the financial resourcesconcentration. Establish a provincial panel data in eastern, central and western regions model byregression analysis, inspect the inverted u-shaped relationship between financial development andurban-rural income gap. Regression analysis results showed that only the eastern region appearedinflection point in the financial efficiency, accord with Kuznets inverted U hypothesis, the rest of themodel to estimate the results do not conform to the Kuznets inverted U hypothesis. That shows themost areas in China is still at the second stage——rapid economic development, the specificcharacteristics are: the dual economic structure is distinct, the weight of financial sector is increasing,under the action of polarization effect, the financial resources are focused in cities, urban and ruralgap is rapidly expanding.The sixth chapter is the summary of full text with two policyrecommendations.