An Empirical Study on the Impact of China’s Financial Development on the Income Gap between Urban and Rural Residents: Based on Provincial Panel Data
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Bin Wang, Jiayu Yang, and Xi Wang
The issue of income distribution is the focus of international attention. In the process of the sustainable development of China’s economy, finance plays an important role in promoting the growth of residents’ income. But the problem of the widening income gap between urban and rural residents needs to be solved urgently. This paper carries out an empirical analysis based on provincial panel data from 2008 to 2017. Through the constructing of models, the paper analyzes the impact of China’s financial development on the income gap between urban and rural residents. The results show that in the short term, financial development will widen the income gap between urban and rural residents. Based on the conclusion, some countermeasures and suggestions are put forward from the perspectives of improving the inclusive financial service system, increasing the efficiency of financial institutions in serving rural areas, promoting the development of digital finance in rural areas, and balancing the distribution of financial resources between urban and rural areas.
Financial development; urban and rural residents; income gap