Informal Finance In Low-income Countries by Dale W Adams Robert E. Hunter

Author:Dale W Adams, Robert E. Hunter [Dale W Adams, Robert E. Hunter]
Language: eng
Format: epub
ISBN: 9780367154585
Barnesnoble:
Publisher: Taylor & Francis
Published: 2020-09-30T00:00:00+00:00

Pawnshop Economy in Sangli

Data on the profitability of institutional pawnbroking in Sangli are not available. Some banks may accept few pawns and some cooperative institutions accept no pawns at all. Other individuals have turned pawning into a specialization that presumably must be rewarding. We collected data on the profitability of a moderately frequented private, registered pawnshop in the area of study. As in the foregoing two Sri Lankan case studies, figures are partly based on extrapolation. The pawnshop studied had an annual turnover of Rs 390,000 on 300 gold advances. Annual return on capital is calculated at approximately 20 percent. Compared to the 12 percent available on a fixed deposit with a bank; this return was not exceptionally high.

Compared to the two Sri Lankan case studies, the figures are much lower, both on the debit and credit sides. Pawnbroking, however, represents only a part of the moneylending done by the individual pawnbroker studied. He also did personal and mortgage loans. Moreover, for many shops, pawning is only a sideline to its main activity, the regular gold trade.

An estimation of profitability of illegal village pawnbroking was of little use. It is only a part-time activity with low turnovers and there is no uniformity at all in operations. But despite its risks, profits appear sufficiently high to attract new brokers into the market.

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