Reputation-oriented Electronic Micro-loaning Based on Smart Contract in a Solidarity Group

Abstract

Digitalization apparently improves the efficiency and flexibility of financial services. In this work, we aim to introduce the Rotation Savings and Credit Association (ROSCA) into electronic commerce. ROSCA is one kind of non-interest lending and called as micro-loaning. The corresponding standards and rules are not severe restricted in comparison with those defined by financial institutions. It is friendly to people whose financial conditions are not so well. In particular, we adopt the smart contract which is a sort of automation technique to fulfill electronic micro-loaning in a solidarity group. Since all specifications of ROSCA are interpreted into functions via a logical transition, the contract content will be automatically implemented once the executing conditions are satisfied. This can significantly result in an effective operation and decrease the transaction cost. Moreover, the reputation strategy is applied to classify players into an appropriate group; thus, leading to mitigating the risk of embezzlement and insolvency.