Research on the Relationship of Rural Financial Development Efficiency and Income Growth of Farmers

Abstract: Byusing vector error correction model (VECM)with control variables and Granger causality test method, correlation and causationof rural financial development and income growth among farmers are re-examined. The results show that in the long term, the scale, structure and efficiency of rural finance development exists co-integration with farmers’ income and the rural investment. In the short term, the scale of development and increase of farmers ’ income rural finance growth has bidirectional Granger causality, while rural financial development structure and efficiency are not the Granger causes to farmers’ income growth. Therefore, expanding the scale of rural financial development in favor of increasing farmers’ income and promoting rural economic development are important. In addition, income growth of farmers and rural economic development can also promote the development of rural finance to some extent. Currently relatively low efficiency of China’s rural credit allocation increases town business loans which is helpful to income growth of farmers