Investigation related to database design for letter of credit

Abstract

The "Letter of Credit" is a fundamental payment mechanism in global trade, and its efficiency has significantly declined due to the impact of the COVID-19 pandemic. This document delves deeply into the development and execution of a comprehensive database for managing Letters of Credit (L/Cs). It is designed with a real-world case study derived from the International Settlement Department of the Bank of China. The central goal of this database is to enhance the efficient management and simplification of the complex procedures inherent in L/C transactions. The development process follows a systematic approach, commencing with the establishment of three fundamental assumptions to delineate the scope of the study. Subsequently, the database design progresses through stages involving Entity-Relationship Diagram (ERD) development, relational model construction, and normalization procedures. These steps collectively culminate in the creation of an intelligently structured database comprising thirteen distinct tables. In conclusion, this paper not only delves into the design and implementation of the L/C database but also showcases its practicality through real-world scenarios. The database, fueled by meticulous design and thoughtful implementation, is poised to revolutionize the management of L/C operations, offering enhanced efficiency and accuracy in international trade transactions.