Tax-Based Information Sharing and Bank Risk: Evidence from China’s Bank–Tax Interaction Policy

Amid China’s efforts to promote financial innovation and optimize credit allocation, the Bank-Tax Interaction (BTI) policy emerges as a transformative mechanism that integrates tax data with banking systems to address the financing challenges of small and micro enterprises. Leveraging a panel dataset of Chinese commercial banks from 2008 to 2020, this study employs a Difference-in-Differences approach to examine the policy’s impact on bank risk. The findings show that the BTI policy significantly reduces bank risk, with effects robust across various model specifications. Mechanism analysis reveals that the policy achieves risk reduction by improving liquidity management and optimizing loan structures, increasing the proportion of credit loans while reducing reliance on secured loans. Furthermore, heterogeneity analysis highlights that the policy’s impact is more pronounced for state-owned banks, non-listed banks, and banks in low-marketization regions, where information asymmetry is higher. These results underscore the BTI policy’s role in reshaping risk management, enhancing financial stability, and supporting the real economy, offering valuable insights for policymakers worldwide.
This README file documents the Stata replication materials for the paper: “Tax-Based Information Sharing and Bank Risk: Evidence from China’s Bank–Tax Interaction Policy.” The replication package contains the cleaned bank–year panel dataset and Stata code used to generate all empirical results reported in the paper.