A study of the pawnbroking industry in Metro Manila

The pawnshop industry in the Philippines started out as a loose institution without any government agency regulating its operation. It was only placed under the supervision of the Central Bank when Presidential Decree 114, otherwise known as the Pawnshop Regulation Act, was promulgated in 1973. Since then the industry has vastly expanded its role as practically the sole source of loans for the middle to lower working class. They are becoming popular as an alternative source of credit to people who are in need of immediate cash. Loans can be easily obtain in a pawnshop provided an item of value can be presented as collateral. Despite its popularity, however, little study has been made about pawnshops. Thus, through this study the researchers would like to determine the problems being encountered by the pawnshops their earning capacity and their role in the financial system. The group used both primary and secondary sources to arrive at meaningful conclusions. This paper studied the current market of the pawnshop industry by conducting a survey on a sample size of 400 pawners or customers. On the other hand, interviews were conducted on 7 pawnshops owners/managers for the management and ownership study. Financial statements of the industry for years 1985-1989 were also gathered from the Central Bank for financial analysis. The pawnshop industry offers an intangible product called service and like any other product, proper marketing should be made to improve its image. However, marketing strategies would be useless if the people behind pawnshops are technically unskilled. This would cause the business to fail because poor service means inefficient operations. B. Industry Problems1. MarketingPawnshops in the National Capital Region (NCR) comprise almost 40 percent of the entire industry. There seems to be an oversupply of pawnshops in the NCR especially in the City of Manila where the opening of new pawnshops have already been prohibited.2. TechnicalMost pawnshops are having difficulties hiring skillful and reliable personnel, thereby, the lack of knowledge poses a danger of overappraisal. Consequently, the opportunity to earn will be lessened