The policy of tax credit bank loan promotes employment in small and micro enterprises

Using the policy of tax credit bank loan (TCBL) as a case study, this paper examines how the reduction in asymmetry in the information of “Banks, Tax Authorities, and Enterprises” affects the level of employment of small and micro enterprises. This paper finds that the implementation of the TCBL can significantly increase the employment level and employment growth rate of SMEs. This effect primarily stems from the increase in the financing level of micro and small enterprises and the expansion of the sector. Moreover, the policy is associated with positive gains in firm productivity and production capacity.