How Smart Contracts Reduce the Cost of Financing in Small and Medium-Sized Enterprises in China

Abstract

Smart contract is a type of contract that exercised automatically if requirements are met in trades, the data on chains is available at all time and no edit or central authority intervene is allowed. In China, SMEs often face high requirement of lending from bank, information asymmetry and region difference when financing. In this research, it is proved that smart contracts reduce SME financing cost via lowering human labour and spend time, which is one of reasons that smart contracts and blockchain are welcomed in SMEs. The government should set related regulations on smart contracts and technical designers need to improve systems in the future so that more SMEs could get benefits during financing programs.