Study on the Influence of the Rural Finance Development and the Incomes Gap Between Urban and Rural in China

Based on the VAR model,this paper empirically studies the influence of the rural finance development to the incomes from 1985 to 2005 in China.The results show that the impact of rural finance development on incomes gap between urban and rural areas has an obvious regional difference,and G o J inverted U-Theory has appeared in the eastern region.In a long term,rural financial development of the eastern and central regions widens income gap between urban and rural areas;in a short term,rural finance development narrows the incomes gap in eastern and middle areas,and expands the incomes gap in western region.Therefore,the overall urban and rural development should focus on building a diversified,multi-level rural financial service system,and improving rural financial capital flow the status quo of one-way to speed up rural financial service system.