Does tax information sharing contribute to employment in micro and small enterprises? Evidence from China's bank-tax interaction policy

: As a tax-based financing pattern, China's bank-tax interaction (BTI) innovatively integrates tax information with banking credit services, offering a novel solution to enterprises' financing difficulties. This study uses unique data from China's National Tax Survey Database and employs the staggered difference-in-differences approach to investigate the impact of the BTI on employment in micro and small enterprises (MSEs). The results indicate that BTI significantly promotes employment growth in MSEs. Alleviating financing constraints of enterprises and improving expectations of market entities constitute the underlying mechanisms. This impact is more pronounced for labour-intensive and growth-stage MSEs, as well as MSEs located in cities with strong policy publicity and abundant financial resources. From the perspective of employment changes, BTI promotes employment in MSEs by increasing job creation and reducing job destruction. Moreover, we also observe that BTI contributes to enhancing the efficiency of labour resource allocation in MSEs. This study highlights the significant value of enterprise tax credibility in enhancing financial accessibility and employment absorption capacity, providing novel insights for emerging markets to explore the use of abundant government data and cross-departmental collaboration mechanisms to foster inclusive employment growth.