The Development of the Pawnshop Industry in East Asia

While the provision of financial services, particularly loan activities, to rural areas has been a long-term goal of Asian governments, rural finance schemes have seldom met with much success. Their failure rate is such, that if markers were sited on each failed rural financial institutions or defaulting farms, the countryside would be littered with such monuments. Of course, not all rural institutions have failed. The Grameen Bank in Bangladesh is frequently cited as a rural lending success story. Other institutions have similarly claimed success, at least for a while, but for the most part, development agencies are still seeking, like a holy grail, an institutional model that can be trans-posed across differing cultures and development levels, yet still achieve success. This government bureaucrat interest is understandable, for one would always like the credit for a new insti-tution, particularly if developed, if not run, by one’s own ministry. At the other end of the scale, the private sector has long understood rural credit, and developed appropriate vehicles to provide it. Unfortunately, as these institutions were developed by the indigenous population (not a foreign expert) and often run by private individuals with little education (not university trained bureaucrats), they were often ignored by government planners. Until recently, these institutions profited from rural lending, which also made them an unacceptable alternative to a highly subsidized government-run credit scheme