The Analysis Of The Impact On The Urban And Rural Income Gap From Financial Development In Hunan Province

Hunan has made rapid economic development and people’s living standards have been greatly improved since the reform and opening up. The actual income gap between urban and rural residents in Hunan Province expanded from 2.40 to 2.91 between the year 1990 and the year 2013, which means it is important to solve the problem of urban-rural income inequality. Finance is the core of economic development, so solving urban-rural income gap problem and the rural financial development is one of the main parts. This paper will conduct research and explore the effects and mechanisms on the development of rural finance and the income gap between urban and rural residents in Hunan.Based on the data from 1990 to 2013, we will make empirical research on the development of rural finance and the income gap between urban and rural residents in Hunan. By extensive literature review. The empirical results show that, the level of investment in rural areas and improvement of financial support for agriculture in fixed assets in Hunan Province will expand the income gap between urban and rural residents in Hunan Province, while the development of agriculture finance will play a positive role in narrowing the income gap between urban and rural residents in Hunan Province. Finally, we will give some policy proposals so as to address the income gap between urban and rural residents in Hunan Province from the perspective of rural financial development in Hunan, including changing the existing concepts and knowledge, paying more attention to rural financial development; Positive policy will support the rural financial development, improve the rural financial market and the regulatory means, perferct the formal system of rural finance institutions, make full use of the rural folk finance in Hunan, and build a diversified rural financial system.