Development of Financial Intermediation and the Dynamics of Rural-Urban Inequality: China, 1978-98

Yiu Por (Vincent) Chen (), Mingxing Liu and Qi Zhang

No RP2006-65, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Using China as a test case, this paper empirically investigates how the development of financial intermediation affects rural-urban income disparity (RUID). Using 20-year province level panel data, we find that the level of financial development is positively correlated with RUID. Examining two subperiods, 1978-88 and 1989-98, we test several competing hypotheses that may affect RUID. We find that the increase of RUID may be explained by fiscal policy during the first period and financial intermediates during the second period.

Keywords: Central banking; Equity; Housing; Transportation (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:rp2006-65

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