China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009
In China, pawnbrokers not only provide financial intermediation services to individuals and households who need to finance their short-term gap between consumption and income like those in many other countries, but also serve as a supplementary financing channel for private entrepreneurs and small a...
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| Format: | Article |
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National University of Singapore, East Asian Institute
2017
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| Online Access: | https://eprints.nottingham.ac.uk/43457/ |
| _version_ | 1848796692594294784 |
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| author | Zhou, Liming Yao, Shujie Wang, Jinmin Ou, Jinghua |
| author_facet | Zhou, Liming Yao, Shujie Wang, Jinmin Ou, Jinghua |
| author_sort | Zhou, Liming |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | In China, pawnbrokers not only provide financial intermediation services to individuals and households who need to finance their short-term gap between consumption and income like those in many other countries, but also serve as a supplementary financing channel for private entrepreneurs and small and medium-sized enterprises (SMEs) who face difficulty in obtaining formal credits. This paper uses the first-hand survey data in 2008-2009 in Zhejiang Province, one of the pioneering regions for developing pawn-broking business, to study the special characteristics of the pawn-broking industry and explain why it has become a viable and useful financing instrument in transitional China. Through examining why there was a serious setback and widespread loss in the industry during the global financial crisis in 2008-09, we argue that the crisis increased the default rate of export-oriented SMEs, which reduced their demand for pawn-broking loans. The strict regulations in the pawn-broking industry and the low efficiency of litigation in China also increased the operation costs of handling defaults by the pawnshops, leading to a temporary setback in an otherwise rapidly growing pawnbroking business during the crisis. However, the pawn-broking industry will continue to play an important role in financing SMEs in China in the foreseeable future. |
| first_indexed | 2025-11-14T19:52:01Z |
| format | Article |
| id | nottingham-43457 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:52:01Z |
| publishDate | 2017 |
| publisher | National University of Singapore, East Asian Institute |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-434572020-05-04T18:44:27Z https://eprints.nottingham.ac.uk/43457/ China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009 Zhou, Liming Yao, Shujie Wang, Jinmin Ou, Jinghua In China, pawnbrokers not only provide financial intermediation services to individuals and households who need to finance their short-term gap between consumption and income like those in many other countries, but also serve as a supplementary financing channel for private entrepreneurs and small and medium-sized enterprises (SMEs) who face difficulty in obtaining formal credits. This paper uses the first-hand survey data in 2008-2009 in Zhejiang Province, one of the pioneering regions for developing pawn-broking business, to study the special characteristics of the pawn-broking industry and explain why it has become a viable and useful financing instrument in transitional China. Through examining why there was a serious setback and widespread loss in the industry during the global financial crisis in 2008-09, we argue that the crisis increased the default rate of export-oriented SMEs, which reduced their demand for pawn-broking loans. The strict regulations in the pawn-broking industry and the low efficiency of litigation in China also increased the operation costs of handling defaults by the pawnshops, leading to a temporary setback in an otherwise rapidly growing pawnbroking business during the crisis. However, the pawn-broking industry will continue to play an important role in financing SMEs in China in the foreseeable future. National University of Singapore, East Asian Institute 2017-05-01 Article PeerReviewed Zhou, Liming, Yao, Shujie, Wang, Jinmin and Ou, Jinghua (2017) China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009. China: An International Journal . ISSN 0219-7472 (In Press) |
| spellingShingle | Zhou, Liming Yao, Shujie Wang, Jinmin Ou, Jinghua China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009 |
| title | China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009 |
| title_full | China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009 |
| title_fullStr | China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009 |
| title_full_unstemmed | China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009 |
| title_short | China's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009 |
| title_sort | china's pawn-broking industry and the puzzle of losses during the global financial crisis in 2008-2009 |
| url | https://eprints.nottingham.ac.uk/43457/ |