Does financial development matter the accomplishment of rural revitalization? Evidence from China

Finance is an indispensable part of economic development. Financial development not only supports the implementation of China's Rural Revitalization strategy but also determines the development of economic growth. For this reason, it is important to explore the impact financial development has on rural revitalization. Using panel data taken from thirty provinces in China, during the period of 2011–2020, this paper analyzes the intermediary effect and the relationship between three factors: financial development, agricultural development, and rural revitalization. The paper's findings demonstrate, firstly, that rural revitalization is a long-term and sustainable process, and the development of rural revitalization in the current period will be affected by the previous development level of rural finance but, nevertheless, urbanization development and the tourism development have significantly inhibited the promotion of the rural revitalization. Secondly, financial development could promote rural revitalization, which differs significantly between different regions, and the allocation and the structure of financial resources need to be optimized further. Thirdly, financial development would directly promote rural revitalization and development, and the impacts financial development has on the five components of rural revitalization are different. Then lastly, financial development can indirectly promote rural revitalization and development by improving agricultural production levels. Agricultural modernization plays a crucial “bridge” here. This paper concludes with several policy suggestions for optimizing the allocation of financial resources, improving the financial system, and improving the level of agricultural development for furthering rural revitalization. This paper's study significantly furthers the understanding and the literature on the rural economy, rural revitalization, and sustainable development in China.