Financial Development Impacts On Income Distribution Gap

Income distribution gap will hinder future development of our country. Many researches have been carried out on the income distribution of the residents from the perspective of economy finance and system. But with the development of Chinese financial market, the impact of financial development on the income distribution of residents is gradually emerging.From the perspective of financial development dimension, financial development efficiency, financial development structure, this paper studies the income distribution gap between urban and rural areas, between regions and between industries.Theoretical research includes direct effect of the micro level and indirect effect of macro level. The direct effect of financial development reduces threshold to make more residents enter the financial market and narrow the income gap of residents. The indirect effects of financial development promotes economic growth to increase income of residents. But the impact on the income gap of residents from financial development is required by further empirical test.The multi model empirical analysis, of the 1978-2014 time series yearly data from the macro level, shows following conclusions. Urban-rural income gap has a obvious inverted "U" relationship with financial development structure and has a positive linear relationship with financial development dimension. Grainger causality test shows that income gap between urban and rural areas is the most important income gap. Regional income gap has no obvious linear relationship or inverted "U" relationship with financial development, but these variables are reasons of regional income gap. Income gap between industries has a obvious inverted "U" relationship with financial development efficiency and has a negative linear relationship with financial development dimension.Suggested that China’s efforts to develop Inclusive Finance, reduce the financial threshold, improve the efficiency of financial development, optimize the structure of financial development, improve the multi-level capital market.