Research On The Effects Of Formal Finance And Informal Finance On The Income Gap Between Urban And Rural Areas In China

The large income gap has become a social problem that our country must face.In general,it can be divided into macro economic growth level and other aspects of the cause of excessive income gap between urban and rural areas,among other aspects,the financial development has large impact for the income gap.It is of positive practical significance to study the influence of formal and informal finance on the income gap between urban and rural areas in China.First of all,this paper reviews the literature on the impact of financial development on the urban-rural income gap,which focuses on the impact of formal and informal finance on the income gap between urban and rural literature,then according to the literature experience to determine the corresponding index,finally,using panel regression and quantile regression method of informal finance,the formal financial development on the urban-rural income gap in the empirical analysis,during the quantile regression,this paper divided the sample into the national level and the eastern ?central and western region level ?After analyzing the status quo of China's formal finance,informal finance and the income gap between urban and rural areas,we have measured the financial development and the income gap between urban and rural areas in 31 provinces,municipalities and autonomous regions in 2004-2015 years,and made an empirical analysis with these data.The research shows that:(1)the role of formal finance and informal finance is not the same among different regions in eastern,central and western regions.The development of informal finance is beneficial to the improvement of income gap between urban and rural areas.(2)in different levels of urban and rural income gap,the degree of the function of regular finance and informal finance is different.The role of informal finance in the disparity of income gap is greater than that of the smaller income gap.The role of formal finance is more varied.Besides the level of action,it is also affected by regional differences.Combined with the empirical results,this paper puts forward the following policy recommendations:(1)guide the formal financial institutions to lay out the rural areas and make them play a greater role in narrowing the income gap between urban and rural areas.(2)further regulate the development of informal finance and improve the system and environment of informal financial development.(3)the government should increase the education input and financial transfer in rural areas,and improve the level of welfare security for rural poor residents.In this paper,quantile regression method is applied to analyze the influence of formal finance and informal finance on the income gap between urban and rural areas in the three regions of eastern,central and western.This enriches the relevant theories,and provides theoretical support for all regions to put forward reasonable measures to improve the income gap between urban and rural areas according to local conditions,and has a very good practical significance.