Rural economy is an essential part of China’s national economy. It is necessary to study mutual relation between rural financial development and rural economic growth. In this study, panel VAR model was built. Based on time series data in 1995-2010, it tested the relation between rural financial development and rural economic growth through ADF test, co-integration test and Granger causality test. Finally, it came up with policy recommendations, in the hope of promoting coordinated development of rural finance and rural economy.