Empirical Study On Financial Development Of Anhui Province On The Impact Of Urbanization

With the development of economy, people’s understanding about the role of urbanization is also improved. Urbanization can achieve agglomeration economies about resources and population, it also can coordinates urban and rural development effectively. Most local governments are taking advantage of the function of urbanization to deploy their urbanization strategy actively, and Anhui Province is no exception. In2012, Anhui Province established the construction of new urbanization "11221" project. After the implementation of this project, the speed of urbanization has obviously accelerated, and urbanization has increasingly become an important engine for the economic development of Anhui Province. However, the effect of urbanization is not isolated, huge demand for funds have become an essential element for the boost of urbanization successively. Therefore, in recent years, the supply of funds in promoting the urbanization process has become the focus of various participants, and domestic academia discussed the role of finance from the perspective of urbanization. As a traditional agricultural province, the level of financial market development is low, and the degree of deepening finance is not high in Anhui Province. So in the realization of urbanization, we need to start from the perspective of finance to seek an adequate supply of the funds and to improve the level and quality of urbanization, and we should strive to reach and exceed the national average level of urbanization, and keep pace with the eastern provinces’ urbanization level.Based on the above consideration, the paper chooses the impact of financial development on urbanization in Anhui Province as the research object. In the study of the influence, the paper mainly adopted a qualitative analysis and quantitative analysis methods. In the quantitative analysis, we considered the availability and feasibility of the data. In this paper, the relevant economic indicators on1991-2013Anhui Province are used. Investment conversion rate, ratio of long-term loans and finance-related rate are the control variable. Empirical research on the impact of financial development in Anhui urbanization is being done during ADF test of time-series data, Johansen test and VECM model. In addition, theoretically, the paper takes innovation of this research into account and summarizes the financial development theory and urban theory, and then explains what kind of mechanism of financial development is utilized to influence urbanization. This paper argues that only effective way of urbanization is to provide better funding external environment in order to promote urbanization steadily. According to the existing theoretical analysis, financial environment of urban construction is of great importance. The operational efficiency of urban construction funds should be improved. Therefore, a lot of financial support can promote the construction of infrastructure and provide industrial support for rural urbanization.The empirical results showed that the impact of financial development in Anhui urbanization is stable in the long term. The financial development will continue to influence the process of urbanization. The Investment conversion rate, ratio of long-term loans and finance-related rate reflect that the financial development have different degrees of impact on urbanization, which is consistent with the basic theory. Financial development plays a catalytic role on urbanization, but in some aspects the effect is not prominent, especially the support of the financial-related rate and investment conversion rate in rural urbanization, indicating that the impact of financial development on urbanization in Anhui are still having much room for improvement.In the end, based on the conclusion reached from empirical analysis, we can promote the urbanization by developing finance. So in order to boost urbanization, we must promote financial development. Therefore, the paper proposed the measures which should be taken on promoting urbanization by financial development:Firstly, developing a long-term capital market development plan and create a favorable market environment; Secondly, promoting the coordinated development of regional financial and guarantee the rational flow of funds in urbanization; Thirdly, improving and deepening the degree of finance and providing a variety of financial products for financing urbanization; Fourthly, offering SME the convenience for financing and improving the bearing capacity of urbanization; Fifthly, supporting the development of rural finance, and boosting the rural urbanization actively.