The aim of the report is to make an estimation of China's leverage ratio.

The system of "raising and lowering interest rates" in the sense of monetary policies especially refers to the fact that the central bank makes adjustments based on equilibrium borrowing and lending prices of inter-bank market monetary base.

In the first half of 2015, although credit risks of listed banks were continuously revealed, net profits growth rapidly slowed down, and capital adequacy ratio also faced downward pressure.

According to the Twelfth Five-Year Plan and work arrangement by the State Council on scaling up the pilot programs of VAT （value-added tax）for business tax， China's banking industry would have VAT reform completed by the end of this year.

With China's economy entering into the state of new normal, reform measures are vigorously advanced in different sectors.

Certain achievements have been made in China's financial reform so far, but breakthrough is yet to be made in addressing some deep-seated issues.

This paper aims at a quantitative measurement of the impact imposed by local governments' bond-for-debt swap program on listed banks.