Research on the Correlation between Rural Financial Development and Economic Growth in Hubei

Abstract

This paper selected three indicators in Hubei rural areas, such as rural per capita net income, rural financial interrelation ratio and level of rural financial efficiency. We used unit root test, co-integration test, granger causality test and impulse response measurement methods to make an empirical study on the correlation between Hubei rural financial development and rural economic growth. The empirical analysis shows that financial development provides impetus for economic growth and plays an active role in promoting economic growth. However, economic growth doses not significantly promote financial development. Specifically, Hubei rural financial efficiency and Hubei rural finance related ratio obviously impact Hubei per capita net income of farmers. On the contrary, the effect of Hubei rural economic growth on Hubei rural financial development level is not significant. Finally, we proposed some countermeasures and suggestions for further improvement based on the empirical study results.