29 Pages Posted: 21 Sep 2012 Last revised: 12 Oct 2012
Date Written: September 20, 2012
As humankind’s oldest financial institution, pawnbroking has served the financial needs of low-income families for centuries. Recently, and especially in the last five years, an increasing number of consumers have relied on pawnbrokers to help them meet daily financial needs. Seven percent of all U.S. and four percent of all Swedish households have used pawn credit at one time or another. Despite the general public’s increased interest in the pawn industry, evidenced by the popularity of reality television shows like “Pawn Stars” and “Hard Core Pawn,” economists have paid surprisingly little attention to the pawnbroking industry and pawnshop borrowers. We start by reviewing the history of pawn credit and the sparse economic literature on pawnbroking, and then present unique U.S. transaction data and Swedish register data to, first, show aggregate trends, and, second, shed light on the social and financial background of pawnshop borrowers and their behavior within the pawnbroking industry in both countries. We find that the pawnbroking industry and pawnshop borrowers are unexpectedly similar in the United States and Sweden.
Keywords: pawnshops, consumer finance, fringe banking, subprime lending
Suggested Citation: Suggested Citation
Bos, Marieke and Carter, Susan and Skiba, Paige Marta, The Pawn Industry and Its Customers: The United States and Europe (September 20, 2012). Vanderbilt Law and Economics Research Paper No. 12-26. Available at SSRN: https://ssrn.com/abstract=2149575 or http://dx.doi.org/10.2139/ssrn.2149575