Have tax reduction and fee reduction promoted the development of the financial industry?—Empirical evidence based on listed companies in the financial industry

Yang Cao, Jiaming Xie and Wei Zhang

Economic Research-Ekonomska Istraživanja, 2023, vol. 36, issue 3, 2152358

Abstract: Finance plays an important role in China’s new development pattern, and the financial industry is also a crucial part of the country’s economic growth. This paper selects the four financial index data of 76 listed companies in the financial profile of Hithink RoyalFlush stocks and the consolidated balance sheet and consolidated income statement in the China Stock Market Accounting Research (CSMAR) database, empirically studies the impact of tax reduction and fee reduction on the financial industry through the Panel Vector Autoregression (PVAR) model, and gives relevant suggestions. The results show that: (1) The implementation of tax reduction and fee reduction policy makes the net profit available to the financial industry increase in the short term, but the long-term effect is not obvious. (2) The reduction of the tax burden will significantly increase the net sales interest rate of the financial industry within one year, and then the fluctuation in the impact tends to 0. (3) The reduction of the tax burden will lead to the reduction of financial enterprises’ sense of hardship in a certain period of time, which will lead to the reduction of the total asset turnover rate. (4) The reduction of the tax burden will increase the debt-to-asset ratio of financial enterprises within two years, thus increasing financial risk. The research not only provides a theoretical analysis and policy basis for the analysis of the impact of tax reduction on the financial industry but also provides decision support for tax reduction policies to revitalize industry development, stimulate financial market activities, ensure direct access to financial resources to enterprises, and further increase the market activities of the whole society.

Date: 2023
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DOI: 10.1080/1331677X.2022.2152358

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