An Analysis of the Role of Pawnshops in the Financial System

Despite the pawnshop’s recently gained popularity as an alternative source of credit, very little study has been accorded to it. To date, there is hardly any thorough study about it. This paper is an attempt to bridge that gap. It analyzes the role of pawnshops in the financial system with special emphasis on the following: sources and uses of funds, interest rates on loans, profitability and operating efficiency of pawnshops and linkages between pawnshops and banks.