Commercial System Reform and Firm Market Vitality: Evidence from the Simplified Deregistration Reform

Commercial system reform is a source of impetus for economic growth and an important means of promoting high-quality market development. Using data on nationally registered businesses and the National Tax Survey, this paper examines how commercial system reform stimulates firm market vitality from the exit-side perspective of the simplified firm deregistration reform. The results show that the reform facilitates firms' voluntary exit from the market through deregistration, encourages first-time entry and re-entry following exit, generates more entrepreneurial activity, and leads to a net increase in the number of market entities. Further analysis shows that the exit of deregistered firms effectively releases public resources and facilitates the settlement of claims and debts. The resulting credit reallocation effectively promotes market competition and increases incumbent firms' innovation investment and production efficiency, thereby revitalizing firm innovation. By focusing on firm exit, the simplified deregistration reform affects every stage of the firm life cycle and stimulates the vitality of market entities in a comprehensive manner, playing an important role in accelerating the establishment of a high-standard socialist market economy.