The Research On How To Measure The Index Of Financial Inclusion And Its Welfare Enhancing Effect

The development of Financial inclusive is designed to service all social groups by establishing an effective and comprehensive financial system. And the current focus of China’s rural financial reform is enhancing the level of financial inclusion in rural areas and achieving full coverage of rural finance. At present a number of studies have been made about financial inclusion by scholars at home and abroad, such as preliminary exploration of methods to measure the financial service level, which is an important reference for financial regulators sector and financial department. But there is no uniform standard on financial inclusion measure indicators and measurement methods, and rarely research is conducted from the perspective of financial inclusion welfare effect, which need to be further research.Based on more advanced financial inclusion measurements in abroad, this article according to China’s specific conditions design a two-dimensional system to measure index of financial inclusion which include financial performance and social performance, and then build a collaborative degree measure model which including social performance and financial performance Referring the coordination theory. Social performance includes four dimensions,such as the coverage of financial services and products, financial services availability,the quality of financial services, and trust relationships; financial performance is mainly include profitability, growth, liquidity, security. The design of Collaborative Model is considered that we can not only increase the financial performance and social performance from two separate aspects to improve the level of financial inclusion, but also need to make the financial performance and social performance of the two dimensions of harmonization, and jointly promote the development of rural financial inclusion. Then use this measurement method to measure China’s rural index of financial inclusion. We found that China’s rural financial inclusion levels showed a steady growth over the years, but the overall level is still low. We analyze the revenue growth effect, income distribution effects and improved quality of life effects of financial inclusion in rural by constructing error correction model. We conclude that the improvement of rural financial inclusion has a great help to the growth of rural incomes in the long term, and to improve the quality of people’s living standards. But in the short term the effect of improving the quality of people’s living standard is not obvious. In addition, the development of rural financial inclusion does not exist long-term stable equilibrium relationship with income gap between urban and rural areas. At last to propose policy recommendations which promote the inclusion of financial services in rural areas according to the preceding study.