The influence of inclusive finance on the income gap between urban and rural residents

Abstract

On the basis of China’s dual structure of urban and rural economy, this paper constructs the inclusive financial index, which contains eight sub-indexes coming from the demand and supply of financial service. And then we analyse the influence of inclusive finance on the income gap between urban and rural residents using the panel data model. The results show that (1) a negative correlation is found between the developmental level of inclusive finance and the urban-rural income gap; (2) under the influence of inclusive finance, the acceleration of economic growth narrows the income gap between urban and rural areas; and (3) the increase of government expenditure causes the income gap between urban and rural areas owing to the characteristic of financial expenditure structure.