Commercial system reform is the most directly related economic system for a new business. It is the basic part of business environment, which greatly affects the cost, complexity and uncertainty of entrepreneurship. In recent years, China has initiated and promoted commercial system reform, which provides rare materials for evaluating the effect of entrepreneurship environment. In this paper, commercial system reform is regarded as a quasi-natural experiment. We collect the data of 283 prefecture-level cities’ commercial system reform by hand, use the Difference-in-Differences Model to investigate the impact of commercial system reform on entrepreneurship, and discuses the influencing mechanism and heterogeneity effect.

The contributions of this paper are highlighted in the following aspects: First, the commercial system is the focus of system reform since the 18th National Congress of the Communist Party of China. Some litera- ture pays attention to the influence of institutions on entrepreneurship, but there is no literature on the effect of commercial system reform on entrepreneurship. More importantly, although the existing literature discusses the impact of administrative examination and approval reform, it focuses more on the administrative examination and approval center. Based on the existing literature, this paper makes theoretical analysis and empirical evaluation on the entrepreneurial effect of commercial system reform for the first time. Second, our study takes the gradual reform of the commercial system as a quasi-natural experiment, and finds out the feasible strategy to identify the economic effect of commercial system reform. In this paper, the text analysis method is used to identify the process of commercial system reform, and the DID Model is used to investigate the impact of commercial system reform on entrepreneurship. Third, this study also analyzes the impact mechanism of commercial system reform on entrepreneurship, focusing on the market entry cost reduction effect and the government operation quality improvement effect. In addition, we also identify the heterogeneity effect of commercial system reform on entrepreneurship.

The results show that commercial system reform has significantly increased the growth rate of new enterprises, and thus improved the level of regional entrepreneurship. Specifically, the implementation of commercial system reform has increased about 2% of regional entrepreneurship activities. This finding has passed a series of robustness tests. The test of the impact mechanism shows that commercial system reform reduces the cost of market entry and improves the efficiency of the government, thus promoting entrepreneurship. Further research shows that the promotion of foreign direct investment, the easing of financing constraints and the improvement of human capital can strengthen the promotion effect of commercial system reform on entrepre- neurship. The findings of this study provide useful reference for deepening economic system reform and stimulating market vitality to the maximum extent.