Abstract: In the new era，the major social contradictions in our country have been transformed into the contradiction between the growing need for a better life of the people and the unbalanced and inadequate development． Problems that still have a big gap between urban and rural development and the distribution of income must be resolved with great efforts． Based on the panel smooth transition regression model，this paper explores whether the development of China’s finance will help narrow the income gap between urban and rural areas in both scale and structure． The results show that the impact of financial development scale and structure on urban-rural income gap is significantly different and there are significant nonlinear characteristics． Specifically，the increase of the scale of financial development will not help to narrow the urban-rural income gap; while with the improvement of the financial development structure，its impact on the urban-rural income gap shows the law of expanding first and then narrowing． This paper believes that further improving the financial development structure，rationally allocating urban and rural financial resources，actually practicing inclusive financial policy，and improving the availability of financial services are important measures and effective ways to narrow the urban-rural income gap and achieve a balanced urban-rural development.

Keywords: Financial Scale; Financial Structure; Urban-rural Income Gap; PSTR Model