Fiscal and Tax Support and Village and Township Bank Performance: "Development View" or "Dependence View"—Evidence from the Panel Data of 1 177 Village and Township Banks in China

Evaluation of the influence of the government's fiscal and tax support of Village and Township Banks(VTBs) on their performance is not only a major issue concerning whether government economic interventions are effective and accurate in relieving the market failure but also a core issue in the achieving VTBs' social and financial goals. Based on the unbalanced panel data of 1, 177 VTBs from 2015 to 2018, the impact of fiscal and tax support of government on promoting the social and financial performance of VTBs is examined using a two-way fixed effect model. The study finds that tax preference has significant positive influence while fiscal subsidies even have significant negative influence on growth of VTBs. The positive effect of tax preference on the outreach and profitability of VTBs is gradually weakened with the increase of operation time. Due to their dependence on supporting tax and fiscal policies, the self-sustainability of VTBs has not been effectively improved. This verifies the "dependence view" on fiscal and tax support.