Blockchain-Based Financial Tracking System for SMEs with Government and Financial Institutions

Abstract

Small and Medium-sized Enterprises (SMEs) play a vital role in boosting the national economy. Currently, SMEs face financial challenges regarding business expansion; consequently, the government provides government-supported low-interest SME loans to enhance their performance. However, research indicates potential for the misuse of this government-provided loan funds. Therefore, this study proposes a blockchain-based financial tracking system for SMEs, utilizing banks or financial institutions as intermediaries for government loan disbursements. The proposed system adopts a hybrid blockchain concept integrated with smart contracts to track financial transactions among SMEs, the government, and financial institutions. Each transaction is automatically validated based on regulations embedded within the smart contracts. This study employs a Research and Development (R&D) approach, comprising problem identification in the low-interest SME loan process, the design of an SME fund-tracking system model, and simulation using Hyperledger Fabric. Simulation results demonstrate that every low-interest SME loan transaction processed through a participating bank requires validation by both the bank and the government, thereby improving the transparency and reliability of the information generated by the financial tracking system.