The Impact Of Inclusive Finance On Urban-rural Income Gap

Since the reform and opening up,the per capita income level of Chinese residents has been greatly improved,but there are still serious uneven distribution of economic resources between urban and rural areas,and the income gap between urban and rural areas is still large.The rural areas lack good financial support for a long time,there are a large number of financial vulnerable groups,which urgently need high-quality financial services.The inclusive financial system is committed to provide low-cost and efficient financial services for vulnerable groups,and then narrow the gap between the rich and the poor,and gradually achieve social equity.Therefore,the development of Inclusive Finance has a certain impact on the income gap between urban and rural areas.In recent years,China's government departments have actively formulated relevant policies and vigorously promoted the development of financial inclusive business,which has achieved some results in the construction of inclusive financial system.However,at present,China's inclusive financial system is not perfect,and there are great differences in the level of Inclusive Finance in different regions,and related policies and measures still face the problems of lack of credit investigation and imbalance of capital supply and demand in the specific implementation process.Scholars also have disputes about the relationship between Inclusive Finance and urban-rural income gap.Therefore,this paper takes Henan Province,a typical province of Inclusive Finance,as an example to study the specific impact of Inclusive Finance on the income gap between urban and rural areas,which is of great practical significance for China to further improve the existing financial system and realize the fair development of urban and rural areas.First of all,through combing the relevant theory and literature research,we find that the impact of Inclusive Finance on the urban-rural income gap is not the same in different stages of development.When the level of Inclusive Finance is low,it mainly expands the income gap between urban and rural areas through the threshold effect and the unbalanced effect of enterprises;when the development of Inclusive Finance reaches a certain stage,it mainly reduces the income gap between urban and rural areas through the financial inclusion effect and the rural poverty reduction effect.Then,this paper selects Henan Province,a typical province,based on the data of banking and insurance industry,constructing the inclusive financial index from the three dimensions of the geographic penetration of financial institutions,the availability offinancial services and the effectiveness of the use of financial resources,and quantitatively measures the level of inclusive financial development in the cities under the jurisdiction of Henan Province.And through the construction of Theil index,the paper calculates and analyzes the income gap between urban and rural areas in Henan Province over the years.At the same time,based on the analysis of impact mechanism and empirical data,this paper puts forward the research hypothesis that Inclusive Finance has an inverted U-shaped impact on urban-rural income gap.Secondly,this paper uses the city level panel data of 17 cities under the jurisdiction of Henan Province from 2005 to 2018 for empirical analysis.Taking the urban-rural income gap as the explanatory variable,inclusive financial index as the core explanatory variable,and the urbanization rate,government expenditure level,economic development level and education investment level as the control variables,a panel fixed effect model and a random effect model are constructed to test the linear and nonlinear relationship between the Inclusive Finance and the urban-rural income gap.The results show that the coefficient of the second term of the inclusive financial index in the nonlinear model is significantly negative,and the coefficient of the first term is significantly positive.Furthermore,the measurement index of urban-rural income gap is changed from Theil index to urban-rural per capita income ratio,which is proved to be credible by robustness test.Finally,according to the empirical facts and empirical results,the conclusions of this paper are as follows: first,the development level of Inclusive Finance in Henan province continues to improve;second,the overall urban-rural income gap in Henan Province tends to narrow,but there are fluctuations in the early stage;third,inclusive finance has an inverted U-shaped impact on the urban-rural income gap.Then,based on the actual market situation and the development trend of Inclusive Finance,put forward policy suggestions from three aspects: improving the breadth and depth of financial market,balanced distribution of inclusive financial resources,and promoting the digital development of Inclusive Finance.