The Relationship Between Financial Development And Income Gap Of Citizens

Since the reform and opening up,economic growth of China has made remarkable achievements and the China's gross domestic product has leapt to the world's second place accompanying with the Chinese residents' income gap expanding.According to the traditional Chinese old saying,inequality rather than poor is the cause of trouble,the income distribution is unfair and the widening income gap may cause a Series of social problems such as social unrest and social stratification.Correspondingly,the financial market has become an important channel for the allocation of capital elements,the impact of financial development on the income gap has been widespread concerned.The rapid development of China's financial market provides good material and information for the study of the impact of financial development on the income gap of Urban residents.This paper uses the panel data of 25 provinces and municipalities in China from 2005 to 2013 to construct static panel and dynamic panel model and to study the impact of financial development on the income gap of Urban residents from the perspectives of formal finance and informal finance.The article is divided into five parts,the first chapter is the introduction,introduces the background and significance of the topic,the basic concepts,research methods and information,innovation and shortcomings,and the content and framework of this paper.The second chapter is the theoretical review of financial development and income gap,including the theoretical review of financial development and income gap,the literature review of the relationship between financial development and income gap,and the literature review of the relationship between informal finance and income gap.The third chapter is about the financial development of China and the income gap between Urban residents,including the formal financial development of China,the development of informal finance and the measurement of income gap between Chinese Urban residents,the two hypotheses of this article.Chapter four is the empirical analysis of the hypotheses proposed in Chapter three.The fifth chapter is the research conclusion and policy suggestion putting forward according to the empirical analysis in Chapter four.The results of this study show that:(1)In the study of the time node,both of the formal finance and the informal finance,to a certain extent,narrow the income gap between Urban residents.(2)The income gap of Urban residents has feature of memory,that is,the current income gap between Urban residents will affect the income gap of Urban residents in the next period.(3)the development of the Service will help to ease the income gap between Urban residents,and the proportion of the Industry rising will expand the income gap between Urban residents.(4)The increase of Education level can help to narrow the income gap between Urban residents,"knowledge change fate" is still an important factor influencing the Chinese household income in current stage.