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Law, Economics, and Conflict$
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Kaushik Basu and Robert C. Hockett

Print publication date: 2021

Print ISBN-13: 9781501759383

Published to Cornell Scholarship Online: January 2022

DOI: 10.7591/cornell/9781501759383.001.0001

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PRINTED FROM Cornell University Press SCHOLARSHIP ONLINE (www.cornell.universitypressscholarship.com). (c) Copyright University of Cornell University Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in Cornell for personal use. date: 19 May 2022

Forgotten Markets

Forgotten Markets

The Importance of Pawnshops

Chapter:
(p.127) 5 Forgotten Markets
Source:
Law, Economics, and Conflict
Author(s):

Marieke Bos

Susan Payne Carter

Paige Marta Skiba

Publisher:
Cornell University Press
DOI:10.7591/cornell/9781501759383.003.0006

This chapter focuses on pawnshops and the institutions of pawnbroking. Studies show that large numbers of poor people and especially those who are unbanked use pawn loans by leaving collateral. This institution has existed for centuries and while attention has shifted away from it, the informal pawn broker remains a source of survival for the very poor. And this is not unconnected to what happens in the larger, formal economy. After the global financial crisis that began in the United States in 2007–2008, quickly engulfed the world, and became the protracted Great Recession, the pawnbroking industry in the United States and Sweden grew by an astonishing 20 percent per year, as poor people were forced to turn to informal credit for their survival. Despite this industry's importance, pawnbroking has characteristically received little attention and also little regulation. The chapter then raises a host of questions regarding the welfare consequences of these informal lending markets in rich countries and how they could be regulated.

Keywords:   pawnshops, pawnbroking, pawn loans, informal pawn broker, informal lending markets, global financial crisis, United States, Sweden, informal credit

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