Pawnshops PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, Q.C. 1029-Aurora Blvd. Cubao, Q.C. Selected Pawnshop Businesses along Sumulong Highway, Marikina City: Factors of Success Submitted by: Leira Susana Arceo Escala Charmaine Santos Tesalona Mariel Navata Nieto John Michael Temporal Soria Ralf Louise Sauro Vico Submitted to: Dr. Carolina D. Ditan Table of Contents Title Page Acknowledgement Acknowledgeme nt List of Tables List of figures Chapter I Introducti Introduction on Background of the study
Theoretical Framework Research Paradigm Statement of the Problem Hypotheses of the Study Significance of the Study Scope and Delimitations Definition of Terms Chapter II Review of Related Literature Foreign Literature and Studies Local Literature and Studies Chapter III Research Methodology Research Design Sampling Design Research Instrument Data Gathering Procedure Statistical Treatment Chapter IV Presentation, Interpretation and Analysis of Data Chapter V Conclusion and Recommendations Summary Conclusion Recommendation Bibliography
Theoretical Framework Research Paradigm Statement of the Problem Hypotheses of the Study Significance of the Study Scope and Delimitations Definition of Terms Chapter II Review of Related Literature Foreign Literature and Studies Local Literature and Studies Chapter III Research Methodology Research Design Sampling Design Research Instrument Data Gathering Procedure Statistical Treatment Chapter IV Presentation, Interpretation and Analysis of Data Chapter V Conclusion and Recommendations Summary Conclusion Recommendation Bibliography
Appendix Appendix I. Letter Letter to the responden respondents ts Appendix II-A. Questionnaire for customers customers Appendix II-B. Questionnaire for employee/staff employee/staff Appendix III. Vicinity Vicinity Map Acknowledgement Acknowledgeme nt We would like to thank our beloved Dr. Carolina D. Ditan, Dr. Emma Guno, and Dr. Mendoza. To them we will always be grateful. Their contribution to this study will transcend this time and age. Allow us to thank also our fellow student of Philippine School of Business Administration QC. For the materials that they submitted which we compiled to complete this study about pawnshop. Studying this problem is not easy if our Professor‘s in PSBA did not help us in this study. Thank you beloved Professor‘s for being always available for us. Thank you friends. I truly value our friendship. Likewise many thanks to Dr. Ditan our Professor in fundamental research for giving us knowledge about the study that we conduct. Specially thanks to this people Malipayon, Edwin Rama, Joey Barroga, Carina Leonore Ngo Ng, Josefa P. Tombali, Remigio A, De Ungria, Jr, Elizabeth Kuria, Nastaran Abizadeh for allowing us to study the case that they made in the past few year. To all our friends who touch our life‘s this is for us.
To our beloved Parents, Nanay and Tatay, who are the potent source of our strength and will power, We give you this study as a gift and proof of our appreciation for all your sacrifices. We give back our loving CREATOR what he has given for us. CHAPTER I THE PROBLEM AND ITS BACKGROUN BACKGROUND D
Introduction Pawnbroking existed in the Ancient Greek and Roman Empires. Most contemporary Western law on the subject is derived from the Roman jurisprudence. As the empire spread its culture, pawnbroking went with it. Likewise, in the East, the business model existed in China 3000 years ago no different than today, through the ages strictly regulated by Imperial or other authorities. In spite of early Roman Catholic Church prohibitions against charging interest on loans, there is some evidence that the Franciscans were permitted to begin the practice as an aid to the poor. Pawnbrokerage arrived in England with William the Conqueror, but known by the Italian name, Lombard. In 1338, Edward III pawned his jewels to raise money for his war with France. King Henry V did much the same in 1415. The Lombards were not a popular class, and Henry VII harried them a good deal. In the very first year of James I Stuart an Act against Brokers was passed and remained on the statute-book untilQueen Victoria had been on the throne thirty-five years. It was aimed at the many counterfeit brokers in London. This type of broker was evidently regarded as a fence. It is also known that Queen Isabella of Spain pawned her jewelry in order to send Christopher Columbus out to what he believed was the Indies. Pawnshop is a business that offers secured loans to people, with items of personal property used as collateral. The word ―pawn‖ is derived from the Latin pignus, for pledge, and the items having been pawned to the broker are themselves called pledges or pawns, or simply the collateral. If an item is pawned for a loan, within a certain contractual period of time the pawner may purchase it back for the amount of the loan plus some agreedupon amount for interest. The amount of time, and rate of interest, is governed by law or by the pawnbroker's policies. If the loan is not paid (or extended, if applicable) within the time period, the pawned item will be offered for sale by the pawnbroker/secondhand dealer. Unlike other lenders, the pawnbroker does not report the defaulted loan on the customer's credit report, since the pawnbroker has physical possession of the item and may recoup the loan value through outright sale of the item.
The pawnbroker/secondhand dealer also sells items that have been sold outright by customers to the pawnbroker or secondhand dealer. Background of the study Marikina City is the home to a number of industries, some of which are the biggest and most successful in their fields. Shoe manufacturing is the best well-known industry. The city manufactures food, cigarettes, porcelain and chinaware, confectionery, automobiles and cars, appliances, electronics, crafts like bags, hats and slippers, and most of all, shoes. Marikina was a highly industrialized city because of its well known shoe industry. The manufacturers earn a high profit that they can buy their own properties, jewelries and other personal stuffs. The shoe industry declined due to the imported items especially shoes that flooded the market that time. To be able to recover the capital that was lost, they pawned some of their jewelries. By means of these so called pawnshops, people used to find ways on how they could exchange their jewelries for money. Theoretical framework The pawning process begins when a customer brings an item into a pawn shop. Common items pawned by customers include jewelry, electronics, musical instruments, and tools (both hand tools and power tools). Gold, silver, and platinum are popular items which are often purchased; even if the source (such as a piece of broken jewelry) has little value, the metals can still be sold in bulk to a bullion dealer or smelter for the value of the gold, silver, or platinum content. The pawnbroker assumes the risk that an item purchased was actually stolen property. However, laws exist in many jurisdictions that protect both the community at large and the brokers from unknowingly engaging in criminal activity (buying and selling stolen goods, also known as "fencing"). In some jurisdictions, pawnshops must give a list of all newly pawned items and any associated serial number to police, to allow the police to determine if any of the items have been reported as stolen. Some pawnshops set up their own screening criteria to avoid buying stolen property.
The pawnbroker assesses an item for its condition and marketability by testing the item and examining it for flaws, scratches or other damage. Another aspect that affects marketability is the supply and demand for the item in the community or region. To assess the value of different items, pawnbrokers use guidebooks, catalogs, Internet search engines, and their own experience to subjectively evaluate the goods. Some pawnbrokers have training in the identification of gems, or they employ a specialist with gem training to assess jewelry. One of the risks when accepting secondhand goods is that the item may be counterfeit. Once the pawnbroker has determined that the item is genuine and not likely to have been stolen, and that it is marketable, the pawnbroker offers the customer an amount for it. The customer can either sell the item outright if the pawnbroker is also a licensed secondhand dealer, or offer the item as collateral. The Pawn Shop wages general pawn brokering services to the general public, which includes providing small collateral loans to individuals based on the value of the property that they bring into the Company‘s store. The business specializes in making loans that are specific to jewelry. Pawn Shops typically operate with a strong say of economy stability as these lenders are often used as a last resort among borrowers that are in need of swift loans or do not have the capability to sell the merchandise that they can use as collateral. As such, the business should be healthy to remain profitable and cash flow positive in any economic environment. OUTPUT A Successful Pawnshop Business * Accessible location * Quick Processing * Quality Service * Provide higher value for pawned items * Low interest rate
Marketing Strategies * Advertising through news, print or media * Sponsorship of events * Loyalty Discount * Usage of internet * Tying up with bank institutions OUTPUT A Successful Pawnshop Business * Accessible location * Quick Processing * Quality Service * Provide higher value for pawned items * Low interest rate Marketing Strategies * Advertising through news, print or media * Sponsorship of events * Loyalty Discount * Usage of internet * Tying up with bank institutions PROCESS 1. Strenghts * Accessibility of the location
* Low interest rate * Quick processing * Provide higher value for pawned items * Quality service 2. Weaknesses * Inaccessiblility of the location * High interest rate * Slow processing * Lower value for the pawned items * Poor service 3. Opportunities * Add-on service * Improvement of faciliies * Additional branches * Increasing number of customers * Economic crisis 4. Threats * Burglary/robbery * Competition from huge chain outlet * Unsafe surroundings / environment * Many competitors * Economic stability
PROCESS 5. Strenghts * Accessibility of the location * Low interest rate * Quick processing * Provide higher value for pawned items * Quality service 6. Weaknesses * Inaccessiblility of the location * High interest rate * Slow processing * Lower value for the pawned items * Poor service 7. Opportunities * Add-on service * Improvement of faciliies * Additional branches * Increasing number of customers * Economic crisis 8. Threats * Burglary/robbery * Competition from huge chain outlet
* Unsafe surroundings / environment * Many competitors * Economic stability INPUT Manager -Supervise and manage the overall performance of staff. Employee - Provide quality service Customers -They are looking for a pawnshop that is accessible and provide low interest rate INPUT Manager -Supervise and manage the overall performance of staff. Employee - Provide quality service Customers -They are looking for a pawnshop that is accessible and provide low interest rate Figure 1. Research Paradigm In the research paradigm, the present study was made to study the marketing strategies and the success factors of the pawnshop business. On the first component we will look on how this study will influence the managers, employees, and the customers. The factors from which the strenghts, weaknesses, opportunities, and threats will determine by
conducting a survey using a questionnare as the research instrument. The informations that will be gather after the survey will undergo in a evaluation that may indicate the factors that greatly affect the success of the pawnshop business. Statement of the problem This research study assessed the success factors of the Selected Pawnshop Busibessses along Sumulong Highway, Marikina.It sought answers to the following questions: 1. What are the strengths of the Pawnshop business? 2. What are the weaknesses of the Pawnshop business? 3. What are the opportunities of the Pawnshop business? 4. What are the threats to the Pawnshop business? 5. What are the marketing strategies used by the pawnshop? 6. Is there a significant difference among opinion of the respondents regarding the strengths and weaknesses of the Pawnshop business when group according to age? 7. Is there a significant difference among the opinion of the respondents regarding the strengths / weaknesses of the Pawnshop business when group according to gender? Hypotheses Alternative -There is a significant difference among opinion of the respondents regarding the strengths and weaknesses of the Pawnshop business when group according to age. -There is a significant difference among opinion of the respondents regarding the strengths and weaknesses of the Pawnshop business when group according to gender.
Null -There is no significant difference among the opinion of the respondents regarding the strengths / weaknesses of the Pawnshop business when group according to age. -There is no significant difference among the opinion of the respondents regarding the strengths / weaknesses of the Pawnshops business when group according to gender. Significance of the study This study will be beneficial to the following: 1. Owner of the pawnshop * The owner/s will be able to identify the customer‘s needs and wants.
* The owner/s will be able to know what to improve and change in the business. 2. Customer * To know further about the services offered by the pawnshop. * They will be able to choose wisely which pawnshop can give them the quality service that they need. 3. Community * To improve the mindset of the people towards the pawnshop business. 4. People engaged in the business * This will serve as a guide on how they will run the business towards their success. 5. Future researchers * This research may serve as a guide or reference to future studies regarding this business to related studies or another thesis.
Scope and Delimitations of the study This study involved 6 pawnshop businesses located along Sumulong highway in Bayan, Marikina namely: Cebuana Lhuillier Pawnshop, Mamas Pawnshop, 18th jewelry pawnshop, RR Pawnshop, Capital Pawnshop and Tambunting Pawnshop. The respondents of this study will 6 managers, 13 staffs and 52 customers of these pawnshops. The research study will cover the period from Aug to Oct 2011. DEFINITION OF TERMS Appraise – to make or give an estimate of how much miney something is worth. Auction - a sale of goods or property at which intending buyers bid against one another for individual items, each of which is sold to the bidder offering the highest price. Collateral – property or goods used as security against a loan and forfeited if the loan is not repaid. Counterfeit- made as a copy of something, especially money, in order to defraud or deceive people. Credit- an arrangement by which a buyer can take possession of something now and pay for it later or over time. Interest- a charge made for a loan or credit facility, or a payment made by a bank or other financial institution for the use of money deposited in an account. Lending- allowing a person or a business to use a sum of money for a particular period of time, usually on condition that a charge interest is paid in return Loan – an amount of money given to somebody on the condition that it will be paid back later. Pawn – brefers to an item of value which the pawner leaves as security with the pawnbrokerin return for a loan.
Pawnee – refers to a pawnshop or pawnbroker. Pawner – refers to the borrower from a pawnshop. Pawnshop/Pawnbrokerage – refers to establishment engaged in the business of lending money on personal property delivered as security for loans. Remittance- money sent as payment for merchandise or services. Transaction – refers to pawnshop activity per pawn ticket. CHAPTER II REVIEW OF RELATED LITERATURE AND STUDIES Related LITERATURE Foreign Literature Signs of an economic turnaround are showing up at some Georgia pawn shops. - ALBANY, GA (WALB) They're often a good indicator of economic prosperity because many people use them like banks for loans or cash advances. For the last year, pawn shop owners say most of their customers have been pawning items to get quick cash. There's still a lot of that happening, but store owners say they're starting to more shoppers looking for bargains on items many would consider luxuries. A large number of customers spending money has been rare during the recession. Most of their customers have been pawning their items to get by. Many people are still pawning items. Some shops have become more selective, taking only the newest and best name brand items. But store owners say the increase of customers spending money is the first positive economic sign they have seen in months.
The store's redemption rate has been close to 70% recently, meaning most people are able to pay back their loans and recover their pawned items. Pawn Shops Attract More Customers Glowing third quarter results from EZCorp (EZPW)on Thursday followed similar news from Cash America (CSH) earlier in the day, hinting that the sudden restriction of credit from banks is pushing more consumers to their local pawn shop. First Cash Financial Services (FCFS) had the same story on Wednesday. EZ Corp reported a net income of $20 million, which was up 39 percent from the same quarter a year ago. US pawn lending drove a lot of that gain. Operating income rose 36 percent in domestic stores. Granted, EZCorp bought 13 new stores, but according to their conference call, most of those new stores were only integrated during the last part of the year. So, as bright as things are for EZCor, it may get even brighter. It is less a critique of pawn shops and more a reflection of the lack of credit available to many Americans at mainstream financial institutions. Credit card issuers are cutting back credit lines, banks and thrifts are making fewer mortgage loans, and businesses are struggling to get loans. Each of these factors contributes to less money available for hiring, for buying goods, and for shoring up home prices. Pawn shops seem to have some clear advantages over payday lenders right now. Both Cash American and EZCorp work in both business, but pawn is the hot ittem. More‖collateral items‖ are coming in, and most are going back out. EZCorp had an 81 percent redemption rate. That means that they get a nice margin on the short-term transaction, but they also benefit from a customer that is likely to come back next month with the same tool set, wedding ring, or children‘s bike. As if to underscore the diverging opportunities, First Cash has been selling or closing its payday stores. Now they only have payday in Texas and Illinois. It is interesting that they would choose to say in Illinois, where recent legislation attempts to rein in payday lending.
Pawn shops have a second thing working for them – they‘re able to gain from the price of gold. There appears to be a lot of consolidation, as well as expansion of new stores. Cash America has opened 81 stores in 18 months. EZCorp has opened 70 in the last 12 months, and they just purchased 13 stores in Chicago and Florida. Oh, and everyone is trying to get more exposure to Mexico. The banks are doing nothing to thwart this trend. Eliminating free checking is only going to move more consumers out of the banking system. When you consider that it was taxpayers that shored up the capital base of the banks, the abandonment of so many families reflects poorly. In 2009, the FDIC said that one in four adults was un-banked or under-banked. Pawn shops are one of their new destinations. For pawn shops, fake goods are deadly enemies | The increasing skill of forgers of designer goods is hastening the end for pawnbrokers. Pawnshop owners scoff at such stories now. The tearjerker tales are no longer part of the job; everything nowadays is abou t trying to tell what‘s real and what‘s fake, and the fake goods keep looking more real. A group of scam artists went around to 26 pawnshops in Seoul putting down golden pigs as collateral to borrow over 100 million won ($106,000). The pigs were actually made of lead and coated with gold, but they weighed the same as solid gold and the pawnbrokers fell for it. The scammers were eventually arrested. Pawnbrokers never share their secrets about distinguishing fake goods to other brokers. Being fooled by fake goods, it seems, is the only way to learn; there are no schools that teach the subject. A common item in pawnshops these days is a golf bag with a full set of clubs. Men leave their golf bags at the counter and borrow money at the beginning of the week. They then pay back the loan on Friday and go golfing over the weekend. On Monday, they come back to do it all again.
Prices at pawnshops are set to wholesale figures. For gold, silver and diamonds, pawnbrokers pay 80 to 90 percent of the item‘s wholesale pr ice. For cell phones and digital cameras, one can get 60 to 70 percent of the wholesale price, because digital products become outdated within three months of being released on the market. There are rules for interest rates as well pawnbrokers cannot as k for
more than the legal monthly interest rate of 5.5 percent. Pawnshops living on borrowed time due to lack of interest One of the country's last remaining pawnshops, Carthy Pawnbroking Ltd, is to be found on Marlborough St and it too looks a world away from the ultraswish retail outlets on the other side of O'Connell St. From the outside, it looks like a downmarket jewellery store. There is a separate entrance for the pawnshop and a worn stretch of linoleum brings you down to a single counter with a heavy metal grille in place to protect staff. The furnishings are old-fashioned and far removed from the fittings you would expect in normal lending institutions, like banks. Only four licensed pawnshops currently operate in Ireland - a far cry from 1904, the year in which James Joyce's Ulysseswas set, when there were 500 official pawnbrokers in Dublin alone. "There's no doubt that fewer people are using pawnshops today," Carthy says. "There are far more sources of credit than there was 20 years ago when I started running this business. Just look at the number of credit cards that are issued every week. Moneylenders are doing big business." Previously, Saturday was the busiest day for Carthy's. Now, the pawnshop only opens on weekdays. The Irish experience is very different to that of the UK, where pawnshops are booming. According to the National Pawnbrokers Association, the British market is worth £100m per annum and is serviced by 700 pawnshops. This week, Britain's biggest pawnbroking chain, Albemarie & Bond, reported a 14pc increase in profits in a year. The firm, which has 65 stores, said an increasing number of people on lower incomes, as well as those
with problems reading and writing or difficulty with English, favour its straightforward service over bank overdrafts and loans. Carthy says British pawnshops generally charge far more interest than Irish operators - sometimes five times as much. But the interest rates charged here are set down by the Office of the Director of Consumer Affairs. The pawning system in Ireland is simple. The customer hands over their easily tradeable goods - called pledges - to the pawnbroker, who values them and advances cash on this valuation. A four-month contract is signed obliging the customer to pay interest of 2pc per month, or part thereof, on the cash advance. The four months can be extended by agreement, but should the pledges be eventually unredeemed, they are put up for public auction - often going for a third of their value. Auctions are usually held twice-monthly by the Rathmines-based auctioneers Herman & Wilkinson. Jewellery accounts for the vast majority of pledges, although musical instruments, hi-fi equipment, cameras, golf clubs and power tools also figure prominently. Pledges are valued just below wholesale prices and arguments over valuations are a rarity. Pawnbrokers like Carthy's normally won't take in a pledge valued at less than 20. Pledges of between 100 and 200 are the typical amounts and a limit of 9,000 per transaction is set by the Department of Consumer Affairs. Pawnbrokers maintain they get a wide variety of clientele, but the common thread that binds them together is the need for immediate credit, coupled with poor access to more conventional financial channels. Carthy says a significant minority of clients are foreign nationals, particularly Ireland's growing Chinese community. Reputed to be the earliest recorded lending institutions, pawnbrokers emerged from Europe in the Middle Ages and for many years were the main source of credit. They acquired their familiar symbol of the three golden balls courtesy of the coat of arms of the famous Medici family in Italy. Indeed, Queen Isabella of
Spain is said to have pawned her jewels to finance Christopher Columbus's trip to America. In the interim, the business has acquired a slightly less auspicious reputation and for many conjures up images more reminiscent of a Dickens' novel than a bona fide credit facility licensed by the Department of Consumer Affairs. There is little to stop operators from setting up shop in Ireland. According to the Director of Consumer Affairs, Carmel Foley, persons must not have a criminal record or tax arrears, and must be, in legal parlance, "fit and proper" and run secure premises. In 2002, the Director of Consumer Affairs issued a licence to a fifth operator, but it was not renewed the following year - a sign that pawnbrokers may really be on their last legs. Business Focus: Licensed pawn shop starts to thrive The largely empty shelves and relative quiet yesterday in Cash-U-Up, a pawn shop at PGCT Center on Phnom Penh‘s Street 274, betrays what has become a thriving business in the few short months since it first opened. Between last August and now, the company has managed to grow its loan portfolio to US$1 million, and management is shooting for between $3 million and $4 million by the end of 2011. Those are strong numbers for an industry that became licensed in Cambodia only in 2010. Cash-U-Up was the fourth pawn shop to be licensed in the Kingdom. Cash-U-Up seems to have capitali sed on the Kingdom‘s need for pawn services that operate in a regulated environment, but management insists that profit is not its top priority. ―We don‘t think it is the major driver that motivated us to operate the business,‖ said Puthkiry Kim, Chief Exe cutive Officer of Cash-U-Up owner,
Vestal Holdings.
―To help the economy as a whole, to help the low -income people in Cambodia‖ is the company‘s goal. Altruism aside, the numbers don‘t lie. There is money to be made in the
legal pawn industry, money enough to possibly lure unlicensed shops out of the shadows. That, along with a general discouragement of trading in stolen goods, was the goal when a law was passed back in January of last year demanding that all pawn shops be licensed, the government has said. Cash-U-Up is a joint venture between Singaporean investor Steven Lam and Cambodia-based Vestal Holdings, which operates a wide variety of businesses in the Kingdom. Its primary function is to loan smaller amounts of money to customers in return for holding collateral of some sort, whether electronics, jewelry, motorbikes or cars, though the shop is licensed to sell the items once people renege on their loans. People trade valuable goods for temporary credit and later reclaim their possessions when they‘ve raised the initial loan amount – plus interest – for Cash-U-Up. Largely, these are people who may not have access to bank or other kinds of financing. Still, that hasn‘t prevented him from loaning large sums of cash. The law states that pawn shops loans ar e capped at 20 percent of a company‘s
capital investment. Given that Cash-U-Up started with $500,000, that means Vong Tith Phearoka can hand out as much as $100,000 to borrowers. And he said he has. Faced with competition from unregulated shops, Puthkiry Kim said two important things keep customers coming through his doors: a low interest rate and the promise of security. Cash-U-Up offers loans at 2 percent to 3 percent, depending on the client, while illegal pawn brokers might ask for 4 percent or more. He offers the same guarantee that borrowers‘ belongings will remain safe until they return for them.
For Hak Mony, that was a selling point. The 28-year-old graduate of the National University of Business has no full-time job. Instead he works as a part-time researcher, which doesn‘t pay enough to cover his living expenses. As a result, he was forced to pawn his motorbike for $800 at a 3-percent interest rate. He plans to reclaim the bike before Khmer New Year, though, and knows that he can trust Cash-U-Up to hold it. ―Confidence is very important for the pawn company. We put [our
valuables] here because they can keep our things very well and with safety and security.‖ ―Just pay the money back, and you can take it back.‖
Cash-U-Up hopes to expand through an ―associate programme‖ that would pay people who referred business to the company. They are looking to recruit everyone from students to even other pawn brokers to participate. One Financial Orientation of Chinese SMEs: Pawn Financing and Its Law and Economics Analysis Pawn financing had been overlooked for more than two decades in China. In the current financial crisis, the financing constraints of Chinese private Small and Medium Enterprises (SMEs) have become more prominent. Due to the difficulties of financing a large number of Chinese SMEs are in a difficult financial predicament. Pawnbroking has the advantage of shortterm emergency financing, and we should pay more attention to it. In this article, the author analyzed many of the pawn business issues, and finally, put forward his own thinking. E-pawnshop: investigating the possibility to incorporate the usage of Internet for pawnshop specific processes The pawnshop industry is a considerable business today. There is an obvious and even growing demand for small short term loans. These kind of loans are something that traditional banks are generally not interested in offering due to high costs to initiate a loan. Pawnbroking is the oldest method of
lending money and the way of conduct is virtually still the same. This means that most processes at a pawnshop are manual. Owners of SMEs (Small and Medium sized Enterprises, pawnshops included) often assume that their business is unique and not fitted for incorporating informational technology such as Internet. This belief often proves to be incorrect making the business less effective andtherefore less competitive. The purpose of this thesis is to investigate and, if possible,suggest possible improvements for the pawnshop business. By studying Swedish laws and legislation and examining solutions that a few Swedish pawnshops are using, a detailed description of work processes were made. These were used to create a new and improved work processes focusing on lowering manual workload, in other words reducing the demand for human input and involvement. This research shows that the processes at a pawnshop are actually very fitted for Internet. A big portion of the manual work can be made more effective and in some cases even automatic. These mostly concern CRM (Customer Relationship Management) which is an major part of the workload. An interesting detail that appeared was that the pawnshop business, when deconstructed into processes, was not that unique or complicated as it might seem. Local Literature Bold Philippines pawnshop heists continue When it comes to pawnshop security, the best defense is a good offense. If you own a pawnshop, make sure you understand that it is up to the you to protect your businesses. MIM Pawnshop Sills and Services always promotes being a proactive business owner. Experience teaches that it is important that a pawnshop owners learn to assess their businesses for its shortcomings. Back in 2010, we posted an article on pawnshop security when a rash of bold robberies of pawnshops were being reported on by the Philippine
media. It is titled: Is your Pawnshop secure? If you are a pawnshop owner we recommend you read it. We think the article is still timely and has the basic common sense information a pawnshop owners can use to protect their businesses. For certain, the topic is still timely as you can see by the article below from philSTAR.com. Unfortunately, this trend of brash robberies still has momentum in the Philippines. This momentum is likely to continue, and possibly increase, as jewelry prices increase due to the rise of gold and silver prices. If you, as a pawnshop owner, feel you need help to understand the security issues involved in the pawnshop business, be sure to contact MIM Pawnshop Skills and Services to set up a consultation appointment. Pawnshop management is our business and we can bring you the information you need to keep your pawnshop secure. We support a proactive approach that identifies the deficiencies before they hit your bottom line. MANILA, Philippines – Interior and Local Government Secretary Jesse Robredo warned local officials yesterday on the new modus operandi used by criminals in robbing jewelry shops, pawnshops and banks. Based on o n the information info rmation provided by Chamber of Pawnshops of the Philippines, Robredo said local and police officials should be on alert when individuals take out leases on vacant business space beside, above, or behind an existing pawnshop, bank or jewelry shop. He said these groups start their operations at night, especially on long weekends, by disconnecting the alarm system and security camera first then drilling through the adjoining walls to gain entry. In case there are no vacant spaces for rent close to the establishment and if it is located near creeks or waterways, Robredo said these syndicates resort to forcible entry, underground tunneling or passing through a big drainage system along the street in front of the target establishmen establishment. t. ―In this case, they open the floor of the vault of the pawnshop as an entry point,‖ he said. Robredo called on all barangay officials, as chairpersons of
the barangay peace and order committee, to immediately mobilize on a
regular basis their barangay tanods for routine patrols during the night until the wee hours of the morning. ―Barangay officials should closely coordinate with and immediately report to
the local police any suspicious movements or persons roaming in areas near the said establishments so that the latter can undertake more in depth surveillance and make the necessary arrests,‖ he said. Philippines: Regulator tightens watch on pawnshops Citing the proliferation of pawnshops across the country, the Bangko Sentral ng Pilipinas has issued a circular amending and tightening existing regulations governing small lenders. The central bank issued Circular 711, an amendment of a previous measure, stressing the need for officers and employees of pawnshops to undergo training on the BSP‘s regulations and anti -money laundering efforts. Through money laundering, criminals can make it appear that their dirty money come from legitimate sources. Since many pawnshops are now into the business of facilitating remittances, regulators said they should also be required to report to authorities suspicious transactions, such as sending and receiving cash from dubious sources. Circular 711 likewise states that assets of pawnshops and items turned over by borrowers as collateral for loans must be insured by companies accredited by the Insurance Commission. This is to protect the public against loss of pawned items resulting from theft and fire. In the circular, the BSP has also identified people who should not be designated as directors or officers of pawnshops. These include individuals convicted of offenses like estafa, embezzlement, extortion, forgery, swindling, theft, robbery, and violators of graft and corrupt practices.
The BSP also prohibits persons found to have violated banking laws or other regulations enforced by other regulatory agencies from being directors of pawnshops. The pawnshop industry in the country has grown and developed over the years. Apart from lending, most shops now offer other services such as bills payment and facilitation of remittances. The BSP said enhanced monitoring of pawnshops would be necessary given the phenomenal growth of the industry. Pawnshops lifeline in hard times THE massive job cuts being implemented by manufacturers and exporters amid the global economic crisis may lead to an increase in the number of unredeemed pawned items. The chamber represents about half of more than 14,000 pawnshops in the country, including the big Lhuillier and Tambunting chains. Ablaza says workers, workers, who may have acquired a few few assets during the good years, may resort to pawning. But without regular employment they will be too hard up to redeem the items. Then pawnshops will have a problem because we do not expect a market for foreclosed assets. Who will buy them? But this is assuming our clients still have items to pawn,? he says. Ablaza estimates that 95 percent of pawnshops serve Filipinos who wh o would otherwise have no access to credit. Their clients can?t open bank accounts because the minimum balance required is too steep, or because they have no permanent address. So they don?t normally qualify for credit cards or membership in savings and loan associations that have strict savings requirements. Jewelry, cell phones Pawnshops often provide loans from P1,000 to P2,500, with jewelry, cell phones and appliances commonly used as collateral. Interest rates
average 4 percent to 5 percent a month, with a minimum term of 30 days, renewable monthly. If the borrower does not redeem the pawned asset when the loan falls due, all he has to do is pay the interest for the next month to keep the loan current. Loans for which interest has not been paid 90 days after maturity are deemed expired and pawnshops are authorized to sell the items to recover their cash. Remittance centers Looser credit card requirements in the last 10 years have led to easier access to cash, resulting in a general decline in the traditional pawnshop business. This has caused many pawnshops to also act as remittance centers, offering its storefronts as pickup centers for cash sent by overseas workers to their families. We noticed that more and more pawnshops have had to double as remittance centers. At first, it was considered an add-on service because pawnshops are quite accessible. But now, more than half of the business comes from remittance services instead of pawns,says Ablaza. He says members of the chamber observed that 2008 remittances were softer, or did not grow as fast as they did in 2007. In addition, pawn redemption that normally occurs in December when people supposedly have extra cash did not happen. Rather, more clients came in to pay loan interest than redeem their jewelry. We saw a combination of two things that offer a bad prognosis for the business: remittances came in but the volumes were not as much as we had expected; and clients probably did not have as much cash as they wanted because they did not redeem their pawns. It?s going to be a tough year,? Ablaza says. For this reason, the industry expects generally flat loan volumes in 2009. Unlike in the United States where pawnshops are experiencing a lot of activity because of a recession, the Philippines is not feeling the [full brunt of the] recession yet. This could be why we are not seeing an increase in
pawns. Or it could also be because people no longer have anything to pawn,Ablaza says. High-end market Still, there is a segment of the pawnshop industry that will likely experience a boom: the high-end market. Ablaza acknowledges that niche players that focus on the affluent can look forward to more business in 2009, but remains mindful that the greater majority of pawnshop clients will be hard up. License plate A Bangko Sentral ng Pilipinas mapping operation has found that 26 percent of pawnshops are not registered, most of them located outside Metro Manila. This presents a risk to consumers as unregistered pawnshops may close at the drop of a hat and clients will have no one to run after for their pawned items. It is important, thus, to look for the Bangko Sentral-issued pawnshop license plate to ensure that the pawnshop is legitimate and authorized to do business. Most of those found unregistered have actually applied for licenses, according to Ablaza. BSP tightens rules on pawnshops MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has issued tigther rules on the operations of pawnshops all over the country to safeguard its assets particularly of pawned items. BSP Governor Amando Tetangco Jr. issued BSP Circular 711 series of 2011 amending the Manual of Regulations for non-bank financial institutions – Pawnshops under Circular No. 656 dated June 2009.
―Existing rules and regulations specifically affected by the provisions of this circular are hereby repealed, amended or modified accordingly,‖ Tetangco
stated in the circular dated January 28. As part of the changes, the BSP introduced a new section on safeguarding the pawnshop assets replacing the provision on bonding of officers and employees. ―In order to safeguard pawnshop assets (pawned items) and mitigate the
risk of loss arising from malfeasance or fraudulent practices of their employees, pawnshops shall adopt new measures,‖ the central bank stated in the 13-page document. The BSP currently supervises more than 15,000 pawnshops nationwide. Under the new provision, the central bank requires the bonding of accountable officers and employees with reputable insurance or surety companies accredited by the Insurance Commission and establishing equivalent self-insurance mechanism acceptable to the BSP. All officers are also required by the central bank to attend a briefing on pawnshop regulations as well as a seminar on the Anti-Money Laundering Act. Furthermore, a corporate pawnshop with total resources of at least P50 million shall comply with the requirement of corporate governance of the Securities and Exchange Commission (SEC). The BSP also tightened the rules on the disqualification of directors and officers wherein persons who have been convicted by final judgement of a court for offenses involving dishonesty or breach of trust, estafa, embezzlement, forgery, malversation, swindling, theft, robbery, falsification, bribery, violation of Batas Pambansa 22, violation of anti-graft and corrupt practices as well as violation of the Code of Conduct and Ethical Standards for Public Officials and Employees are permanently disqualified by the Monetary Board from holding a director position .. The BSP also bars directors, officers, and employees of closed banks, quasi-banks, and trust entities who were found culpable for such closure from holding a director position pawnshops.
Also prohibited are directors and officers of banks found by the BSP‘s
Monetary Board as administratively liable for violation of banking or other relevant laws, rules, and regulations where a penalty of removal from office is imposed. The BSP added that a new pawnshop applying for an acknowledgement of registration with a minimum paid up capital of P100,000 may open one branch subject to compliance with applicable branching requirements. Every branch of a pawnshop should pay a one-time processing fee of P1,000 and P500 annual fee upon approval. The central bank also requires pawnshops to submit a capital build up program should a crime result in deficiency in its minimum capital or prudential capital. Pawnshops with assets of at least P50 million are required also to submit a copy of their audited financial statements duly received by the Bureau of Internal Revenue (BIR) to the BSP not later than June 30 of each year. Pawnshop owner posts P300k bail on P22M tax evasion case MANILA, Philippines —Pawnshop owner William Villarica has posted a P300,000 bail to evade prison after the justice department charged him with a multimillion-peso tax evasion case. In a statement Saturday, the Bureau of Internal Revenue, which filed the case against Villarica, said it learned about Villarica‘s posting of bail a few days after the Department of Justice found probable cause in the tax evasion complaint against Villarica. The justice department said it filed a formal case against Villarica with the Court of Tax Appeals after finding probable cause in the tax evasion charge by the BIR. Citing documents from the tax court, the BIR said Villarica posted a total of P300,000 worth of bail. The bail has allowed Villarica to keep himself from getting jailed while the case is being heard in court. Villarica, sole proprietor of the W Villarica pawnshop, is charged with a P22.4-million tax evasion case for allegedly failing to pay taxes in 2007
even if he was able to buy a Lamborghini luxury sports car worth P26 million. Of the P22.4-million cost of the tax evasion case, P16.2 million covers the tax on luxury items as well as accumulated interests, while P6.2 million is the cost of the value added tax. It took the justice department about one year to file a case against Villarica before the CTA. The BIR filed its complaint against Villarica before the justice department in July 2010. The case against Villarica is the first ―Run after Tax Evaders‖ (RATE) case
filed by the BIR under the Aquino administration. Under the RATE program, the BIR intends to file taxes against high-profile individuals or entities to discourage the public from evading taxes or paying inaccurate amounts of taxes. The program is aimed at boosting tax collection by the BIR upon President Aquino‘s directive for the government not to impose new taxes. Under the President‘s directive, tax collection should increase by improving
tax administration, particularly tighter audit of taxpayers. Related STUDIES Foreign Studies DEVELOPMENT OF ISLAMIC PAWN-BROKING SERVICES:DIFFERENTIATING PROFILES OF THEIR RESPECTIVE PATRONS Abstract Traditionally, pawnshops in Malaysia had played the role of ―poor -man‘s bank‖ by providing procedurally non -cumbersome loans against the
mortgage of jewellery and other such small items of value. Though the oppressive elements of the conventional pawnshops may have been much reduced by the provisions of the Pawnbrokers Act 1972, the practices are still inconsistent with the tenets of Sharia. This led, initially, to the emergence of the first Islamic pawnshop in 1991. Subsequent development
led to the institutionalization of Islamic pawn-broking, initially on a localized basis in the Islamic dominant states, and currently on a national basis. SUMMARY AND CONCLUSION Generally, the Islamicized Conventional Pawnshops continued to attract the relatively low-income stratum of the society which they had been serving in their pre-Islamicised form. Besides, they appealed more to the females than they do to the males. In term of age, their customers are generally in the early 40‘s. In contrast, the institutional Ar-rahn is seen to be carving a market among the relatively higher income groups compared to the Islamicised Conventional Pawnshops. It is also seen to be gender neutral —appealing equally well to the males as well as the females. Besides, age-wise they seem to be attracting a relatively younger segment of the society. The study offers results that could possibly be used advantageously by the two groups of Ar-rahn service providers. Besides the demographic variables that are conventionally used in market segmentation. The study also offers some lifestyle dimensions that could enrich the development of marketing efforts of the relevant service providers. In view ofthe ―outdoor‖ nature of the customers that had found an appeal to their services, the institutional Ar-rahn service providers, for example, could possibly use the outdoor advertisements. Besides, they could also appeal to the print media in view of the inclination to ―read‖ among their customers. The findings could also be of help in developing advertising copy. To reach their customers, the institutional Ar-rahn could possibly employ an outdoor social setting among a relatively younger group of some economic means. The converse would be true for the Islamicised Conventional Pawnshops. Given the ―more‖ open nature of the institutional customers and the more
potent communication tools that they are capable of being exposed to, the patronage of institutional Ar-rahn is expected to expand in tandem with the expansion of the network of facilities that is occurring in the country. When gifts become commodities: pawnshops, valuables and shame in Tonga and the Tongan diaspora
Abstract Far from being displaced by modernity, the exchange of women‘s textile
valuables of little practical value but enormous ritual significance is increasing in importance in Tonga and amongst Tongan migrants in the industrial West. The dwindling production and heightened demand of these textile valuables have prompted entrepreneurs to open pawnshops, where customers who are monetarily poor mortgage valuables and customers lacking in exchange networks buy unclaimed valuables. Pawnshops convert valuables into commodities and transform the social relations among those involved. However, the one emotion that underlies traditional exchange, shame, remains central to the transactions, albeit in unevenly distributed fashion. The transformation of textiles from gift to commodity displays both rupture and continuity with pre-modern forms of exchange, continuity operating at the level of emotional subjectivities. Our analysis foregrounds objects on the one hand and emotions on the other as shaping the course of cultural and social history. Modernity, Conclusion By providing a modern mechanism in which Tongans can realize the value embodied in traditional valuables without necessarily alienating them for good, pawnshops enable individuals to ne gotiate their own positionality between family-oriented exchange-based traditional Tonganness and the needs of the individual in a capitalist and diasporic modernity. We found both old dynamics and new ones at play in pawning for all invcustomers who pawn, customers who buy, and entrepreneurs. Continuity characterizes emotional experience of exchange, with shame figuring prominently in all aspects of pawning, in the same way that it is the dominant emotion in ritualized exchange. Whetheentrepreneurs or consumers, sellers or givers, men or women, homeland- or diasporabased, tenaciously traditional or adventurously modern, Tongans are subject to the abiding relevance of mā as an emotion. How they negotiate their own shame vis-à-vis the shame oothers will continue to play a role in how they incorporate money into their systems of traditional exchange and how their valuables continue to be markers of identity. Ruptuare found in
the social relations between transactors, and in the uneven distribution of shame (or perhaps of the fear of shame) among the participants. Both rupture and continuity characterize patterns of social inequality: the preexisting uneven distribution of wealth makes pawning possible, but pawning aggravates this uneven distribution. Pawnshop owners‘ place in the moral order and the exchange system illustrates multiple and contradictory opinions about what it means to be a cultural insider in modern ongan society. Furthermore, the identity markers of pawnshop customers – the average ongans – are also in flux. Tongan identities are not fixed, and when Tongans ask one t people they gossip about, ‗What denomination does s/he belong to?‘ they are emonstratin g how aware they are of the importance of church affiliation as a concentrated index of people‘s position in the system, in its past as well as its future. Church affiliation Tonga tells you whether the person is likely to be burdened by obligation but also stautraditional, or at the forefront of modernity but flirting dangerously with the margin. It alsotells you about the person‘s emotions, rank, aspirations, and body habitus (cf. WatsGegeo and Gegeo 1991). While agreeing with characterizations of modernity as diffuse, shifting, and ungrounded (Englund and Leach 2000), we continue to give it a central role in our annot least because, whatever modernity is, it is the object of so much desire and the cause so much anxiety for our informants (cf. Osella & Osella 2006:570). We have argued hea nuanced approach to subjectivities of modernity, to which members of society bring different emotions, different intensities of emotions, as well as different material strategies visà-vis objects and money. And it is in the crevices between these different subjectivthat we should seek an understanding of what changes and what stays the same. Payday Loans versus Pawnshops: The Effects of Loan Fee Limits on Household Use Abstract This paper uses data from the January 2009 Unbanked/Under banked Supplement to the Current Population Survey File to examine how household use of payday loans and pawnshops as reported in the supplement in related to limits on loan fees set by some states. We use
information in the basic CPS to measure household demand as related to the economic and demographic characteristics of households and use this information to construct demand-adjusted measures of payday loan and pawn shop use in geographic areas where states laws permit payday loan stores to operate. We examine how demand-adjusted payday loan and pawnshop use is related to effective fee ceilings on these products. We find little relationship between levels of fee ceilings in their current range and adjusted payday loan usage. Results for pawnshop indicate somewhat more variation in demand-adjusted usage over the current range of pawnshop fee ceilings. The results are generally consistent with conjectures that payday stores can adjust their scale of operations to maintain profit margins and thus can continue to lend. As such, the finding suggest that lowering loan fee ceilings up to some point can benefit borrowers; many of whom report using these loan to meet basic living expense or to make up for lost income. Getting the Domestic Financial Architecture Right Abstract The Asian Crisis of 1997-98 highlights the importance of the financial sector to development. The loss of wealth and income that followed in its wake underscored the nexus between robust financial systems and the reduction in poverty that is expected to accompany economic growth and development. That crisis, which capped those of the past two decades by its widespread domestic and international contagion, catapulted the architecture of the international financial system, and by implication that of the domestic system, to a position of prominence on the agenda of international economic issues. It also demonstrated flaws in the ShawMcKinnon1 thesis of financial liberalisation that was incorporated into the Washington consensus and that was accompanied by financial sector crises in developing countries during the decade of the 1980s and 1990s. The attention given to the financial architecture is intended to make the system
more robust and less prone to crisis and to ensure that financial intermediation supports steady growth and development. The initial concern with financial architecture has been with the international financial system but since the international system includes a linked network of domestic financial systems, it was inevitable that the architecture of domestic financial systems would also come under scrutiny. This paper examines the reforms of the domestic financial system in developing countries. It makes the case that developing countries must continue to strengthen their prudential regulation and supervision of the financial system or face endemic crises that will wipe out the gains in poverty reduction. The paper is divided into four sections; the first examines the relation between the development of the financial sector and economic growth and the second reviews the structure of the financial systems in developing countries; section three reviews prudential regulation in developing countries and section four sets out what must be done to make the system work as intended. Summary Developing countries can benefit from the positive relationship between financial sector development and economic growth but to do so they must modernise and reform the financial sector and markets. While the first steps in financial sector reform concentrated on the creation of new and specialised institutions, endemic crises in the decade of the 1980s and 1990s culminating in the Asian Crisis of 1997-98 also highlighted the importance of prudential regulation and supervision. Even though the importance of regulation and supervision to the orderly development of markets and institutions is clear developing countries have continued to experience setbacks in the implementation. To make prudential supervision and regulation work better developing countries should not neglect the importance of sequencing financial sector liberalisation and prudential regulation. They should err on the side of higher capital requirements that set out in the
Basle Core Principles impose tighter lending limits and financial restraints, have well defined intervention rules that limit forbearance and reduce political pressure on Regulators and, above all, they should invest heavily in the training of staff needed to manage and regulate the financial system. The U.S. Check Cashing, Money Transfer, Pawnshops and Payday Loan Services Industry MarketData Enterprises, Inc. in June, 2008. Abstract This updated analysis by Marketdata examines the controversial but growing "alternative financial services" sector - a $27 billion business comprised of loosely regulated check cashing, payday loan, money transfer and payday loan services. These outlets serve 35% of the U.S. population. Many companies are happy to accept the business of consumers with spotty credit records who have been rejected by banks--the 12 million "unbanked" households that choose not to use traditional banks. Explosive growth had taken place in the payday loan business, but they have come under heavy scrutiny. Critics say these services gouge consumers with high fees and interest rates, but they do provide more convenient hours, less red tape, easier credit, and most customers don' t seem to complain. There are 13,000 check cashing outlets, 11,000 pawn shops, 25,000 payday loan stores and 467,000+ money transfer agents competing for this business today. Many outlets/services overlap-providing multiple services at the same site. The study explores why growth at check cashers and pawn shops is meager, and the effects of the economic slowdown. This new study by Marketdata examines the nature of the business, reasons for the growth of non-bank services, immigration trends, national receipts/growth from 1999-2007, 2008 to 2013 forecasts, average store revenues, customer demographics, key industry trends, federal/state industry regulation/fee caps, self-service check cashing machines, profit margins, franchising, gold prices, global remittance trends, consumer debt
levels, reasons for the industry' s past negative image, and more. Findings of research studies by: Fannie Mae, Georgetown University, FISCA, Federal Reserve Board, brokerage analysts, Natl. Check Casher' s Assn., The World Bank, INS, Natl. Pawnbroker' s Assn., U.S. Census Bureau, FDIC, and more. This study is believed to be one of the few in-depth publicly available business analyses that exists of this market. 13 in-depth company profiles (with 2005-2007 financials) are provided for: ACE Cash Express, Check Into Cash, Dollar Financial, Western Union, Moneygram, Ria Financial, Cash America, EZCORP, First Cash Financial, Advance America, Check Into Cash, CNG Financial, and QC Holdings. THE OPTIMIZING OF RAHN SERVICE FOR THE DEVELOPMENT OF ISLAMIC BANKING IN INDONESIA Abstract This paper considers rahn in classical fiqh with various opinions from Islamic schools of jurisprudence (madzhab). Here, one issue becoming debate among Moslem scholars is the use of mortgaged objects. Rahn is adopted by Islamic banking and becomes one of its services offered to the market. In practice, rahn appears as two different products. First, as a complementary product, that is additional transaction (guarantee/collateral) for other products such as ba‘i al -murabahah financing. In this case, Islamic banks can detain debtors ‗mortgaged objects because of transaction. Second, as an independent product. In some Moslem countries including Malaysia, rahn has been being used as an alternative for the conventional pawnshop. Differing from that in conventional, in rahn debtors are not charged with interest. Instead, they are obliged to pay entrustment cost, conservancy cost, and custody cost, as well as appraisal cost. The main difference between such rahn costs and interest is, whereas interest can accumulate, costs of rahn can be paid once and specified in advance. People interest toward conventional pawn service is exactly high because they had to get cash. This can be seen from the increase of pawnshop turnover from year to year. Rahn
Service is thus potential to be implemented and maximized. Logically, charged with high interest people still considering pawnshop as benefactor, much less Islamic banking with Rahn service charging no interest. Hence, we are natural to optimistically introduce rahn service. Of course with manners and regulations that are free from the elements of riba. Local Study A brief overview of the role of pawnshops in the Philippines Our parents used to tell us: the moment you start earning, buy some jewelry and other properties. You can pawn them whenever you encounter financial difficulties. (Mario Lamberte – 1988). Pawnshops offer financial services known as microlending which is an important source of credit in many developing countries, especially in Asia. Pawnshops fill a void left by the banking system. They provide poor and low-income households with credit that would have not otherwise have been available and increase competition in the credit markets by providing an alternative source of credit for those who are frozen out of loans from banks. This has served as a financial safety net for the poor and lowincome households. Pawnshops can provide these financial services to poor and low-income households for a variety of reasons. One is that pawnshops fall under less regulation than other financial institutions. Pawnshops used to operate like a sari-sari store with very little government control. In fact the only time these units came into contact with government agencies was when they paid business registration fees and income taxes. They were not even covered by the usury law enacted in 1916. (Mario Lamberte – 1988). Beginning in 1972, The Bangko Sentral ng Pilipinas‘ (BSP), known as the
Central Bank in 1973.was given the authority and responsibility to regulate pawnshops. Presidential Decree 114 (29 January 1973) and the Central Bank Circular No. 374 (13 July 1973) set out specific regulations covering the operations of pawnshops.
Pawnshops are still among the least regulated businesses that fall under the authority the BSP. Under the BSP‗s regulations pawnshops are authorized to lend, but cannot accept deposits and are required to submit regular financial reports. The BSP has financial audit authority over pawnshops and can inspect book records and general business practices. It also has the authority to sanction a pawnshop. Although in 2009, the BSP did issue a new, more stringent, set of rules that will govern all pawnshops operating throughout the country. The new rules will replace the existing implementing rules and regulations of Presidential Decree No. 114 also known as the Pawnshop Regulation Act issued in 1973. The new rules are designed to enhance consumer protection and foster confidence in the pawnshop industry by the pawning public. For instance, proprietors, partners, incorporators, directors, stockholders and officers of pawnshops must meet certain ―fit and proper‖ standards to ensure that pawnshops are owned and run by people without any derogatory record and to promote good governance. Pawnshops are now required to maintain a minimum level of capital or net worth in relation to their loan portfolio as the existing statutory capital of P100,000 has become too small and it is susceptible to the proliferation of ―fly -by-night‖ operators. Another reason pawnshops can provide these financial services to poor and low-income households is that their loans are backed by hard assets which lowers the transaction cost to the borrower and the lender and eliminates the need to analyze the borrower‘s creditworthiness. Over time the pawn item has changed. In the past, for example, Mario Lamberte noted (1988) that ―pawnshops have preferred lees bulky items high-value items like jewelry. With the advent of more competition pawnshops have broadened the type of items they accept as collateral‖. This change continues today with the acceptance of computers, cell phones and other electronic devices as collateral. Because of the efficiency of pawnshop operations, they have been shown to be a profitable business. A study for the Philippine Institute for Development indicates that efficient management of pawnshops allows
25% of the gross operating income to flow to the bottom line as net profits (Lamberte, 1988). The pawnshop industry in the Philippines has seen spectacular growth. This growth has largely been attributable to (1) the role that pawnshops serve in filling a demand that is not being filled by the more traditional banking system: It gets credit to those who don‘t have access to traditional bank loans and (2) pawnshops operate with large profit margins. This has not gone unnoticed by small entrepreneurs and job seekers in the Philippines as they have flocked to the pawnshop industry. Mobile payments in the Philippines: Future Opportunities for Growth We often hear that M-PESA was able to scale quickly because it targeted an unmet need: urban to rural remittances. Safaricom based the initial launch of the M- PESA service on the ‗send money home‘ proposition because a large proportion of split families in Kenya needed a way to send money to relatives in rural areas but had few ideal options to do so. In many markets, however, such a clear unmet need does not exist. The Philippines is a prime example of this. Even though mobile money providers have been in the market for over ten years, they have struggled to gain market share in the face of well known and well established payment providers. Knowledge and usage of mobile money services are low with less than 4% of users of all payment service providers reporting usage of mobile money services and awareness of four mobile money products ranging between 28% and 46%, even though more than 70% of users have access to a cell phone Our study focuses on the demand side of domestic payment services: bill payments and money transfers In 2010, the Bill & Melinda Gates Foundation launched a study with Bankable Frontier Associates to understand the demand for domestic payment services in the Philippines and to identify potential opportunities and unmet needs for mobile money providers to target. The study found the Philippines is an active and mature payment market, with a myriad of payment providers, including payment centers, banks and pawn shops to
choose from. Only 28% of respondents reporting they make no payments and most Filipinos are aware of and using multiple service providers. In our study, we focused on three primary types of domestic remote transactions mobile money has the potential to target: bill payment, money transfers, and loan payments. Bill payments are most common and are used by 55% of the population. They are followed by transfers (used by 33% of the population), and loan payments (used by 16% of the population). We did not explore access to financial services, although 29% of respondents claim to be saving at home or in banks, or other potential drivers of mobile money that have had success in other countries, such as public transportation and online purchases. In this paper we use the results from the study to explore five alternative and almost equally used channels for bill payments or money transfers. Pawnshops are the preferred channel for money transfers, with 29% of Filipinos citing the leading pawnshops (M Lhuillier and LBC) as the main payment service provider in the last twelve months. Payment centers are used to pay bills by 21% of Filipinos while bank transfers are the prefer method for 17% of Filipinos for both money transfers and bill payment. Informal transfer options are the primary method for money transfers and bill payment for 15% of Filipinos. Alternatively, 13% of Filipinos pay their bills directly or are direct payers. Existing payment channels are good but far from perfect In order for mobile money to take off in competitive markets like the Philippines, providers will not only need to identify a high potential target opportunity, but also ensure their ability to effectively serve the m arket‘s needs relative to the competition. We have identified user pain points in the following areas when paying a bill or conducting a money transfer: speed of delivery, trust and reliability, price, and customer service. Consumers in the Philippines have access to a number of channels that may provide either speed, trust or good customer service but none of them is ideal, leaving room for a service that gives customers more of what they value. For bill payments, customers can pay in a bank or payment center. Both options have their short comings: although banks are trusted (especially
with large amounts), they suffer from long queues, unfriendly and limited staff. Payment centers are cheap and closer to home than a biller‘s office, but also suffer from long queues and delays to credit customer payments at the biller. In addition, neither banks nor payment centers are widely accessible, especially in rural areas. In fact, 32% of users reported they would be willing to pay PhP 50 (US$1.50) for bill payment services that do not require them to leave their home. For money transfers, customers have the option of using banks,‖ big brand‖ money transfer services, pawnshops or informal channels. Pawnshops are the most popular given their ubiquity, trusted brand and speed (if picked up at the pawnshop) but the most popular pawnshops, M Lhuillier and Cebuana, are not completely customer friendly. M Lhuillier has long queues, strict verification and unsafe locations and Cebuana has high fees. The larger transfer companies like Western Union and LBC have high attrition rates due to high fees and other problems. LBC, for example, offers door-to-door service, but it can be slow and their customers complain that their neighbors know when money is delivered. Consumers also complain about the stigma of entering pawnshops. Banks offer security, privacy and trust for larger transfers, but are not always accessible. Although alternative channels are not perfect, mobile payment providers find it difficult to convince consumers to try a mobile payment service as evidenced by low usage figures (4%) compared to other payment options. According to our study, users of one type of payment providers tend to be sticky. Our survey conducted among users of payment services found that fewer than 10% of one-time users have stopped using a service. They also tend to think their payment service is the best, providing high scores on trust, convenience, speed, security, fees and customer service. Users say they would utilize a new payment service in addition to their current service, rather than in lieu of it. Some segments are still not served by formal providers Mobile payment providers also have an opportunity to target market segments not served by formal providers such as personal direct payers and users of informal service providers.
33% of the population still pays for their bills and loans directly at the biller‘s
office, and do not use other intermediaries such as banks or payment centers. The vast majority of personal direct payers (75%) indicate that they trust only themselves to deliver payments, although 57% agreed that paying bills would be easier to do via a third party. Perhaps by tackling the issue of trust, mobile money operators can convince these potential customers, who tend to be male, to try their services for the convenience they can offer. Users of informal service providers may also be a potential market niche. 25% of all users use informal service providers on a regular basis for smaller, regular transactions. These users tend to be rural and poor women who generally make bill and loan payments intra-island. In fact, these users in rural areas rarely pay bills or loans through formal service providers, and when they do, they use the leading pawnshop. Although informal options are low cost, they suffer from delays, the sender has no automated confirmation of when the money arrives, funds can be stolen, and unanticipated costs may arise (such as tips or paying for food or petrol of the deliverer). Similar to a country that does not have many formal payment options, such as Kenya pre-MPESA, providing an alternative to the existing options can meet a need that resonate strongly. Lower value transfers are an untapped opportunity Mobile payment providers may also have an opportunity to facilitate lower value transfers between family and friends that occur informally and that higher cost channels (including pawnshops) cannot profitably serve. Our study found that 52% of Filipinos receive money from friends and family (either as a loan or a remittance) in the event that they need to make a purchase or pay a bill but do not have enough money. The rest seek money from alternative sources: 15% will do something to earn the money themselves, 12% will wait for their salary and 10% will go to an ATM to withdraw cash. Filipinos also regularly send or receive money, for emergencies, daily household expenses, education, bill payment, or business expenses. Sweeping these low value transactions through mobile money services would mean a significant increase in their volume of transactions as well as customers. In addition, 33% of all users said if they
could make cross payments between mobile money schemes, then they might find this persuasive enough to try them. Next steps for mobile money providers During the last ten years, mobile money providers in the Philippines have struggled to gain traction in the market. They compete against an active payment market with numerous strong alternative channels for bill payments and money transfers. However, these alternatives are far from ideal, according to customers themselves, and niches exist in the payments market that have not been targeted. Mobile money providers have an opportunity to attract customers away from existing payment options, persuade customers to use their services in addition to their current payment provider or to target segments that are not currently served by formal payment providers, such as personal direct payers and users of informal service providers. In addition, they may have an opportunity to capture lower value transfers.. The challenge faced by mobile money will be to encourage customers to try their service and to convince them through early trials of the superior value of the service. The extent to which they will succeed in doing so will depend on the investment mobile operators are willing to make in strategic marketing, getting their fee structures right and creative partnerships with banks and others that may add value to the customer experience. STUDY OF PAWNSHOPS IN CUBAO, Q.C SUMMARY OF FINDINGS The researcher presents the findings based from the analysis and interpretation responses on the questionnaire gathered from the (9) pawnshops under study. PROFILE 1.1 YEARS OF EXISTENCE Based on the collected several pawnshops have a continuing operation for so many years despite of the unstable economic and political condition of the country.
Four of the respondent pawnshops have existed for more than sixteen years. While others have been in business for 6-15 years, only one pawnshop has been operating within five years. This is the newly established pawnshop. 1.2 ORGANIZATIONAL STRUCTURE All of the pawnshops are registered with the Securities and Exchange Commission (sec) and regulated by Central Bank of the Philippines (CB) pursuant to PD NO. 114- regulating the establishment and operation of pawnshops. These pawnshops are issued by these governing agencies circulars quarterly, representing 56 percent of the total population. Findings of the study revealed that the nine pawnshops or majority of them were organized as corporation as supported by information gathered from the Securities and Exchange Commission (SEC). 1.3 CAPITALIZATION Majority of the respondents were initially capitalized at P100, 000 but less than P200, 000 in compliance with PD NO. 114 wherein the minimum capital is P100 000. As gathered from the data collected about 20 percent of the present capital is borrowed. However, as the volume of loan increase, likewise increase their capital through borrowings. With the present economic condition, the bigger the capital, the better chances the industry to survive wherein competition with other pawnshops in terms of interest rate, mode of interest, collection and appraisal comes in. The cash loan out is at par with the cash collection of the respondent pawnshops. 1.4 PROFITABILITY, STABILITY AND LIQUIDITY Majority of the respondent pawnshops show a favorable profitability , stability and liquidity position as expressed in terms of net income to total assets ratio, debt-to-equity ratio and current assets ratio.
2. OPERATIONS OF THE BUSINESS The operation of pawnshops is based on the guidelines and rulings of the central bank of the phil. Under PD NO. 114- Regulating the establishment and operation of pawnshops. They are also registered with the Securities and Exchange Commission for corporation and Department of Trade and Industry for single proprietorship. Likewise, taxes paid to the Bureau of Internal Revenue. 3. PROBLEMS ENCOUNTERED BY PAWNSHOPS Based from the findings of the study the common problems encountered by the pawnshops are acceptance of plated or fake articles, over appraisal of items pawned, individual letters sent to pawners for maturing loans are not received on time and strict compliance of central bank‘s reportorial req. 4. CONTRIBUTION OF PAWNSHOP TO THE ECONOMY OF THE COUNTRY Pawnshops play a vital role in the economy of the country. They contribute tremendously to the socio-economic needs of the people by providing immediate loan. These loans are obtained at the easiest way and at lower interest rate that no other finance institution can offer. 5. FUTURE OF THE INDUSTRY The respondents perception as to the future of the industry is very good. They are very optimistic in their perception and feel that it will continue to grow and develop. CONCLUSION: 1. Based on the findings of this study, the researcher forwards the following conclusion: 1.1 Years of existence Several pawnshops have already existed for so many years despite the odds. Only one pawnshop has been in operation within 5 years . This goes
to show that the pawnshop business is a profitable one, hence they had gone so far in the industry. 1.2 Organizational Structure The respondent pawnshops are family corporations registered with the Securities and Exchange Commission. Therefore, the management of the business is handled by the members of the family and all profits divided between the capital partners. 1.3 Capitalization About 20 percent of the present capital of the pawnshops is borrowed from banks. Majority of the respondents were initially capitalized at P100,000 but less than P200,000 in compliance with PD NO. 114- Regulating the establishment (….) and operation of pawnshops wherein the minimum capital is P100, 000. 1.4 Profitability, Stability and Liquidity The profitability, stability and liquidity of pawnshops casured by the relevant ration indicate a favorable position. This resulted to the expansion of pawnshops and continued existence through the years. 2. Operations of the business The establishments of pawnshops are governed by the central bank of the phil. (CB) pursuant to PD no. 114-Regulating the Establishment and Operation of Pawnshops. Likewise, they are also registered with the Securities and Exchange Commission for corporations and with the Department of Trade and Industry (DTI) for single proprietorship. 3. Problems Encountered by Pawnshops Several problems encountered by pawnshops poses as a hindrance for its growth and development in the country. 4. Contribution of Pawnshop to the Economy the Country
Pawnshops have given considerable contribution to the economy of the country. It has a well-defined role in the community and it is the only nonbank finance institution that provides instant credit to everyone which cannot be obtained by him from any other source with the same ease that pawnbrokers require of the people. The taxes paid yearly generate revenues to the government, thus contributing to the recovery of the economy of our country. 5. Future of the Industry The future of the industry as perceived by the respondents is very good and promising despite of the economic situation of the country. Due to the high demand of the services and loan that a pawnshop can offer, the researcher is very optimistic that it will continue to grow through the years. RECOMMENDATION In the light of the foregoing conclusion, the following recommendations are forwarded by the researcher: 1. The minimum capital requirement of the pawnshop industry be increased from 100,000 to 300,000 for the business to operate profitably and competitively with other pawnshop and finance intermediaries. 2. Pawnshops should be organized on a more scientific basis of management to be able to give the maximum help to the community. a. Seminars for those interested to venture into a business. b. Publications of newsletters for the members of the Pawnbrokers Association to give information about the trend in the business. 3. The pawnbrokers should endeavor to acquire modern tools or equipment that will aid the appraisers in detecting the genuiness of gems pawned to protect them from being victims of fraudulent pawn. 4. With the intricacies pointed out in connection with the seemingly simple business, the pawnshop owners should have a sound knowledge of the key functions of the business, ike bookkeeping and safe keeping.
5. For the future investor he should be prepared to invest more than the required minimum capital prescribed for more profit, better chance of survival and to operate competitively with other pawnbrokers. More pawnshops to be established would create employment opportunities for the unemployed and additional revenues to the government. PROFITABILITY OF SELECTED PAWNSHOPS IN COTOBATO CITY SUMMARY The findings of the study are summarized as follows: 1. Most of the establishments have been in the pawnshop business for at least seven years and are formed as sole proprietorship. Three of the respondents have branches in the city. Two of which have been in the pawnshop business for a long time while one establishment opened other branches even though it is new in the business. Two establishments have three branches in other areas. 2. The most common amount for initial capitalization is in the range of P300,001 to P500,000. The money came from the owners‘ own pockets and from borrowings. 3. The maximum number of employees hired per pawnshop establishment averaged three to four. Hence, multi-tasking is employed in the establishments as the employees handle numerous tasks. A significant number of employees have been with the establishment since its inception. Therefore, employee turnover rate is quite low. 4. All of the respondents believed in training their appraiser but the kind of training varies since some of the owners send their appraisers to formal training by attending seminars while others choose in house training. 5. Half of the respondents are located in commercial sites in Cotobato city. The main reason of pawnbrokers for choosing the location of their establishmentis its accessibility. Four out of six respondents are located in the same street.
6. The most common type of collateral accepted is jewelry. Market value, appearance and ksrat are the three most common criteria in jewelry valuation. Competition greatly affects the valuation of collateral. 7. At present, the prevailing interest rate is between five to six percent per month. It is during the month of June when people need money the most while pawners tends to redeem their pawned items during the month of December. Since pawners are required to pay interest on a monthly basis. Renewal process does not have peak months. Auctions are usually scheduled during December since employees are receiving their bonuses and thus, have extra money. The average loan amount per transaction in the cotobato area is P500 and below. When asked about the average number of daily transactions most of them choose up to 25 range whether it is peak or off-peak season. Majority of the respondents has an average percentage of pawned items redeemed, renewed and auctioned between the range of 26 to 50 percent for each process. 8. Pawnbrokers usually schedule their auction three to four times in a year and they sell the items either in wholesale or retail. Auction is believed to generate mor profit than the other three processes. 9. The ability of the company to generate profit based on sales is topped establishment E, while establishment A ranked first in its ability to generate the adequate return on equity an assets. On the aggregate, the average ROS, ROE and ROA of selected pawnshops were catching up with the industry averages for the same period per BSP records. 10. There is a significant relationship between capital structure and profitability particularly on return on sales. ROE and ROA did not show significant relationship with capital structure. CONCLUSIONS: Pawnbroking is still a lucrative business to engage in, despite all the challenges faced by the pawnshop owners but effective management is needed to ensure the business remains profitable in the future. Hence, the assumption is correct that pawnshop business is profitable.
The highest percentage of pawnshop profitability comes from the auction process. Therefore, the assumption that pawnshops make more money from the interest earned in lending, redemption and renewal incorrect. There is a significant relationship between capital structure and profitability particularly on return on sales, hence the hypothesis that there is no significant relationship between capital structure and profitability. Recommendations: 1. Pawnbroker must see to it that they have a steady flow of capital in a pawnshop business since pawnbroking is seasonal as evidencedby the peak months in lending and in redemption. 2. Anyone who wants to open a pawnshop or a new branch must make sure that the location is accessible and in a commercial area where people frequent. Pawnbrokers must find location that are not yet saturated by competitors. 3. Pawnbrokers must continually educate themselves about the new techniques or tools in appraisal by attending seminars in jewelry evaluation. This will minimize errors in acceptance of dake jewelries. 4. Pawnbrokers must find areas in their operation where they can reduce costs and expenses in order to increase their profit. This will result in higher ROS, ROE and ROA. 5. Pawnbrokers must improve their equity and asset utilization in order to have better ROE and ROA. 6. Offer excellent service to customers by understanding the culture and traditions of the Mslims. Thus, gaining competitive advantage over the competitors. 7. The law-making bodies mustincrease the amount of initial capitalization of the pawnshop establishment since higher profitability. Bangko Sentral ng Pilipinas, must require appraisers to undergo a licensure examination to ensure that they are qualified to work as such. They also need to review or revise any regulations that does not anymore answer the need of the pawnbrokers and the pawners.
Electronic Banking: Delivering Microfinance Services to the Poor in the Philippines Abstract Microfinance has proven to financial institutions (i.e. banks) that the services they provide to their ―traditional‖ clients can also be offered to poor and low-income entrepreneurs and clients, in a sustainable and viable manner. These institutions have seen that reaching out to the majority of the country‘s population, which is the low -income market, does not necessarily mean a losing proposition for their institutions. Similarly, it is only appropriate that the more efficient and cheaper methods of providing these financial services, such as electronic banking services, which are offered to valued traditional bank clients, should also be offered to microfinance clients. The increased convenience and lowered costs arising from innovations in electronic banking should also benefit the poor and low-income clients. This paper will present a brief overview of the microfinance ―industry‖ in the
Philippines as well as the recent developments of increased commercialization. Commercialization of microfinance has spurred greater competition leading to increased innovations in microfinance products and service delivery. Two case presentations will be made on existing models in which technological innovations of electronic banking are being used specifically to serve microfinance clients. First, is the use of mobile telephones through the short messaging services (SMS) to pay for microfinance loan amortizations using electronic cash platforms. The other case is a brief example of the distribution of Automated Teller Machine (ATM) cards to microfinance clients, which aims to lower costs for the microfinance institution while increasing convenience for the clients. These two examples will include the discussions on enabling factors, barriers and obstacles. A closer look at the implication for regulation particularly by the Bangko Sentral ng Pilipinas will be undertaken. The direction of policy, existing relevant regulations and rules will likewise be presented.
CHAPTER III RESEARCH METHODOLOGY Research Design The method used in this research study is the descriptive research method. It illustrates characteristics and data about the population particularly the customers, managers, and employee of an entity. It also describes the current nature and current event on the business. It is able to discuss the progress and the accurate data needed to make this research study possible. This method is also used for frequencies, calculation and others statistical figures related on the business. Furthermore, all the necessary details were gathered through giving away questionnaires to the respondents and conducting a survey. The researchers provided survey instruments particularly- questionnares to hear what truly exists regarding the business. The data were tabulated according to its group depending on the concerns like the gender, age, the number of employees and staffs and customers per day. The study also includes the research instrument used and procedures on gathering the data. The data gathered were calculated, tabulated, classified and defined properly through the use of tables and figures. Research Locale Marikina, officially the City of Marikina, known as the Shoe Capital of the Philippines. Bayan, Marikina is the town centre of the Marikeños. It is an accessible location in buying commodities for household facilities and other personal needs. It is also accessible to the people who transact business in many establishments that are located there. Respondents of the Study NAME OF PAWNSHOPS | NO. OF EMPLOYEES | NO. OF CUSTOMERS | 1. Cebuana Pawnshop | 2 | 20 |
2. 18th Jewelry Pawnshop | 3 | 21 | 3. Capital Pawnshop | 2 | 20 | 4. Mamas Pawnshop | 2 | 20 | 5. Palawan Pawnshop | 2 | 20 | 9. Tambunting Pawnshop | 2 | 5 | Total | 13 | 106 | Table 1.1 Table 3.1 A Age of the Respondents (Employees/Manager) Age | Frequency | Percentage | Below 20 | 0 | 0% | 21-30 | 5 | 26% | 31-40 | 11 | 58% | 41-50 | 1 | 5% | 50 Above | 2 | 11% | Total | 19 | 100% | 58% of the employees/managers of the Pawnshops involved belong to the age bracket of 31-40. This may infer that most pawnshop owners prefer their employees to be within this age bracket because they already have work experiences. Table 3.1 B Age of the Respondents (Customers) Age | Frequency | Percentage |
Below 20 | 3 | 6% | 21-30 | 15 | 29% | 31-40 | 12 | 23% | 41-50 | 13 | 25% | 50 Above | 9 | 17% | Total | 52 | 100% | The questionnaires distributed were mostly answered by respondents ages 21-30 garnering 29% of the total number. It seemed that this age bracket patronize pawnshops due to their needs because this age is where people are looking jobs. We all know that we spend some money in looking for a job because of getting the requirements needed by the company you are applying at or some are in an early marriage or family. Table 3.2 A Gender of the Respondents (Employees/Manager) Gender | Frequency | Percentage | Male | 7 | 37% | Female | 12 | 63% | Total | 19 | 100% | Among the Employees/Managers, 63% are females and the remaining 37% are males. It shows that pawnshop businesses are dominated by females, this might due to the reason that females can transact better by their communication skills rather than males. Table 3.2 B Gender of the Respondents (Customers) Gender | Frequency | Percentage |
Male | 19 | 37% | Female | 33 | 63% | Total | 52 | 100% | Female respondents comprise 63% of the total sampling size while the remaining 37% were distributed to male respondents. This is likely to infer that more female are engaged in pawning maybe because they are also the one who are in-charge of budgeting within the family. The Subject Population The researchers selected six (6) pawnshops as a subject in the subject area of this study- namely the Cebuana Pawnshop, 18th Jewelry Pawnshop, Capital Pawnshop, Mamas Pawnshop, RR Pawnshop and Tambunting Pawnshop. The researchers also selected the population or the respondents randomly in no particular order in each subject pawnshop. The researchers will give out questionnares on each subject pawnshop having a total number of 71 respondents overall. And having a sample size at least 52 is required to for the statistics to perform. Sampling Design As seen below is the computation using sample size formula. n= N n= sample size 1+Ne2 N= population size e= margin of error- 10% For Employees: n= 19 1+(19)(.102) n= 19 1.19
n= 16 For Customers: n= 106 1+(106)(.102) n= 106 2.06 n= 52 Research Instrument The study will use survey questionnaires to gather relevant data. Moreover, the researcher will also use studies related to the performance of a pawnshop and will compare to its existing data in order to provide conclusion and competent recommendations. A self-administered structured questionnaire will be employed by the researchers so as to come up with an analysis and evaluation of cu stomer‘s perception. The research instruments were made for the managers/employees comprises the strengths, weaknesses, opportunities, and threats of their business which they have to rank using ordinal numbers. Factors on how effective their marketing strategies were also included. On the other hand, questionnaire for the costumers includes their profile particularly their age and gender. Customers will choose rank their perceptions on why or why not they patronize pawnshop. Date Gathering Procedure The researchers will make use of questionnaires as essential tools in gathering data regarding the performance of pawnshops within Bayan , Markina. A number of selected owners, employees and customers will be courteously given this to gather their percepttions on certain information with regards to the subject. Afterwards, the researchers will compile the questionnaires dustributed and tally the results. Findings will be presented in tabulated form, through graphs and tables, to further understand the gaps and diffrences found out.
Statistical Treatment The results from the data through the use of quetionaires were gathered, tabulated, described and well analyzed. Arithmetic Mean, Ranking, Frequency and Spearman‘s test are use to calculate the result of this study. 5. Arithmetic Mean X= ∑fx ∑f
Where: X= Weighted Mean ∑fx= Sum of all products of f and x
f= Frequency of each weight x= the weight as 5, 4, 3, 2, 1 ∑f= sum of all the cases or respondents
6. Ranking This assigns and put in order and in sequence the classifications according to its rank or position by using ordinal numbers (by 1, 2, 3, 4 or 5). 7. Frequency It is actual number of respondents to the questionnaires or in a particular item in the questionnaires. 8. Spearman‘s Test
P= 1- 6x∑d2 n(n2-1) Where: d2= square of the difference ∑d2= summation of the squared of the difference
n= number of categories
n2= squared number of categories 9. Chi-square Test X2= (O-E)2 E Where: X2= chi-square O= expected frequency E= observed frequency CHAPTER IV PRESENTATION, INTERPRETATION AND ANALYSIS OF DATA This chapter presented, interpreted and analyzed the data gathered in our survey questionnaires starting from the SWOT analysis and marketing strategies of the pawnshops until the number of times and reasons for a customer to visit a pawnshop. Table 4.1 Strengths of Pawnshops according to Owners/Employees Reasons | Frequency | Rank | Accessibility of the location | 18 | 1 | Low interest rate | 10 | 4 | Quick Processing | 17 | 2 | Provide higher value for pawned items | 12 | 5 | Quality service | 14 | 3 | The respondents think that accessibility of the location is a highly significant strength of their pawnshop business because it is the most important factor when satisfying their customer‘s wants. Customers d efinitely seek for
pawnshop that is nearest than the other especially when there are emergency situations. Table 4.2 Weaknesses of Pawnshops according to Owners/Employees Reasons | Frequency | Rank | Inaccessibility of the location | 3 | 2 | High interest rate | 2 | 3 | Slow processing | 3 | 2 | Lower value for pawned items | 6 | 1 | Poor service | 6 | 1 | The respondents think that lower value for pawned items and poor service are the highly significant weaknesses of their pawnshop business because people seek for higher value for pawned items and quality service that will meet their needs and satisfaction. Table 4.3 Opportunities of Pawnshops according to Owners/Employees Reasons | Frequency | Rank | Add-on service | 11 | 1 | Improvement of facilities | 4 | 3 | Additional branches | 4 | 3 | Increasing number of customers | 6 | 2 | Economic crisis | 2 | 4 | The respondents think that add-on service is the highly significant opportunity of their pawnshop business because it can attract the
customers to acquire their services. People want that they will just go to one pawnshop where they can acquire the services that they need. Table 4.4 Threats of Pawnshops according to Owners/Employees Reasons | Frequency | Rank | Burglary/robbery | 12 | 1 | Unsafe surrounding/environment | 10 | 2 | High cost of store rental | 8 | 3 | Competition to huge outlets | 7 | 4 | Economic stability | 4 | 5 | The respondents think that burglary/robbery has a great effect on the threats of their pawnshop business because their business is about pawning jewellery, gadget, other valuable things and it‘s all about money which catches their attentions. Table 4.5 Marketing Strategies of Pawnshops according to Owners/Employees Marketing Strategies | Frequency | Rank | Advertising through news, print or media | 5 | 1 | Usage of internet | 3 | 3 | Sponsorship of event | 4 | 2 | Tying up with bank institutions | 2 | 4 | Loyalty discount | 4 | 2 | The respondents think that advertising through news, print or media is the most effective way of marketing strategy of their pawnshop business it can be distributed by the employees and can target specific group of people.
Table 4.6 Frequency of Visits Frequency of Visit | Frequency | Rank | Once a week | 7 | 3 | Once a month | 23 | 1 | Twice a week | 6 | 4 | Twice a month | 7 | 3 | Occasional | 9 | 2 | The table shows that 23 out of 52 respondents visit a pawnshop once a month. Most respondents often go to a pawnshop maybe because they only visit the establishment when needed. Table 4.7 Pawned Items Items | Frequency | Rank | Jewelry | 30 | 1 | Electronics | 12 | 3 | Tools | 3 | 4 | Musical instrument | 0 | 5 | Gadgets | 16 | 2 | Out of 52 respondents, no one answered that they pawn musical instruments when they visit a pawnshop. Tools fall on the fourth and electronics on the third rank. Gadgets as the second rank, may infer that nowadays, technology play a big role in the economy. Garnering 30 out of 52, jewelry falls under the first rank which is the highest. Maybe because jewelry has the highest value than the other item especially those which are gold platted jewelries. Table 4.8 Why They Patronize the Pawnshop
Reasons | Frequency | Rank | Accessibility of the location | 32 | 2 | Low interest rate | 27 | 3 | Quick Processing | 25 | 4 | Provide higher value for pawned items | 33 | 1 | Quality service | 33 | 1 | The respondents think that higher value for pawned items and quality service are the highly significant reasons why they patronize a pawnshop because this will satisfy their needs. Table 4.8 Why They Patronize the Pawnshop Reasons | Frequency | Rank | Inaccessibility of the location | 16 | 1 | High interest rate | 16 | 1 | Slow processing | 10 | 3 | Lower value for pawned items | 15 | 2 | Poor service | 15 | 2 | The respondents think that inaccessibility of the location and high interest rate are the highly significant reasons why people don‘t patronize a pawnshop because people want that the pawnshop be located in a more accessible place and want to have lower interest rate. Conclusion Based on the findings, the following conclusion are drawn: It can be concluded that the null hypothesis by which there is no significant difference among opinion of the respondents regarding the strengths and weaknesses of the Pawnshop business when grouped according to age and gender is accurate.
As for the marketing strategies, advertising through news, print or media of pawnshops is the most effective and the latter follows; it can be distributed by the employees and can target specific group of people. As of their loyalty discount and sponsorship of events, pawnshop employees agree that these attract the customers. Recommendation: Pawnshops provide various services to people who seek to satisfy their needs. Managing a pawnshop is not simple, there are threats that may lead to the failure of the business. Based on our research, burglary/robbery is on the top of it. The researchers therefore recommend the following: * To locate their pawnshop in a strategic location which is more accessible to the customers. * To have a higher value for pawned items and develop a quality servuce. * To have all kinds of pawnshop services that a customer needs s that the customers will always go to them than transfering from oe pawnshop to the other just to acquire different services that they need. * To have security precautions within the area for the the safety of the employees and customers. * To focus more on advertising through news, print, or media as their marketing strategy. BIBLIOGRAPHY Agcaoili, Lawrence., ―BSP tightens rules on pawnshops‖. The Philippine
Star Bisnon, Bonia P., ―Profitability of selected pawnshops in Cotobato City‖. (M.
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http://newsinfo.inquirer.net/28899/pawnshop-owner-posts-p300k-bail-onp22m-tax-evasion-case Sison- Paras Carla., ―Pawnshops lifeline in hard times‖. Philippine Daily Inquirer http://opinion.inquirer.net/inquireropinion/talkofthetown/view/20090201186721/Pawnshops-lifeline-in-hard-times Sung-ho, Baik., ―For pawn shops, fake goods are deadly enemies‖. http://joongangdaily.joins.com/article/view.asp?aid=2748834 The Bill and Melinda Gates Foundation., ―Mobile payments in the Philippines: Future Opportunities for Growth‖.
http://mmublog.org/blog/mobile-payments-in-the-philippines-futureopportunities-for-growth/ Letter to the Respondents SIR/MADAM, We, the Research students from the Philippine School of Business Administration- Quezon City, are currently conducting a survey regarding
our research project entitled, Selected Pawnshop Businesses along Sumulong Highway, Marikina City: Factors of Success. In this regard, please allow us to conduct a survey of your employees and customers. We assure you that all the data that will be gathered will be dealt with confidentiality. We are hoping for your cooperation to make this research possible. Thank you and God Bless! Respectfully yours, Ralf S. Vico John Michael T. Soria Charmaine S. Tesalona Mariel N. Nieto Leira Susana A. Escala Noted by: Dr. Carolina D. Ditan Adviser/Research Professor Questionnaire for Employees/Manager Gender: ( ) Male ( ) Female Age: ( ) below 20 years old ( ) 21 to 30 years old ( ) 31-40 years old ( ) 41-50 years old
( ) 51 yrs old and above 1. 2. What are the strengths of your Pawnshop? Kindly rank your answers from a scale of 5 to 1 where in: Legend: 5-Highly Significant 4-Moderate Significant 3-Significant 2-Less Significant 1-Not Significant STRENGTHS | 5 | 4 | 3 | 2 | 1 | Accessibility of the location | | | | | | Low interest rate | | | | | | Quick processing | | | | | | Provide higher value for pawned items | | | | | | Quality service | | | | | | 3. What are the weaknesses of your Pawnshop? Kindly rank your answers from a scale of 5 to 1 where in: Legend: 5-Highly Significant 4-Moderate Significant 3-Significant 2-Less Significant 1-Not Significant
WEAKNESSES | 5 | 4 | 3 | 2 | 1 | Inaccessiblility of the location | | | | | | High interest rate | | | | | | Slow processing | | | | | | Lower value for pawned items | | | | | | Poor service | | | | | | 4. What are the opportunities of your Pawnshop? Kindly rank your answers from a scale of 5 to 1 where in: Legend: 5-Highly Significant 4-Moderate Significant 3-Significant 2-Less Significant 1-Not Significant OPPORTUNITIES | 5 | 4 | 3 | 2 | 1 | Add-on service | | | | | | Improvement of facilities | | | | | | Additional branches | | | | | | Increasing number of customers | | | | | | Economic crisis | | | | | | 5. What are the threats to your pawnshop? Kindly rank your answers from a scale of 5 to 1 where in: Legend: 5-Highly Significant
4-Moderate Significant 3-Significant 2-Less Significant 1-Not Significant THREATS | 5 | 4 | 3 | 2 | 1 | Burglary/robbery | | | | | | Unsafe surrounding / environment | | | | | | High cost of store rentals | | | | | | Competition to huge outlets | | | | | | Economic stability | | | | | | 6. What are the marketing strategies used your pawnshop? Kindly rank your answers from a scale of 5 to 1 where in: Legend: 5-Highly Significant 4-Moderate Significant 3-Significant 2-Less Significant 1-Not Significant MARKETING STRATEGIES | 5 | 4 | 3 | 2 | 1 | Advertising through news, print or media | | | | | | Usage of internet | | | | | | Sponsorship of events | | | | | | Tying up with bank institutions | | | | | |
Loyalty Discount | | | | | | Questionnaire for Customers Gender: ( ) Male ( ) Female Age: ( ) below 20 years old ( ) 21 to 30 years old ( ) 31-40 years old ( ) 41-50 years old ( ) 51 yrs old and above 1. How often do you visit the Pawnshop? ___ Once a week ___ Once a month ___ Twice a week ___ Twice a month ___ Occasional 2. What do you usually pawn when you visit the shop? ___ Jewelry ___ Electronics ___ Tools ___ Musical Instruments
___ Gadgets 3. What are the reasons why you patronize this pawnshop? Kindly rank your answers from a scale of 5 to 1 where in: Legend: 5-Highly Significant 4-Moderate Significant 3-Significant 2-Less Significant 1-Not Significant Reasons | 5 | 4 | 3 | 2 | 1 | Accessibility of the location | | | | | | Low interest rate | | | | | | Quick processing | | | | | | Provide higher value for pawned items | | | | | | Quality service | | | | | | 4. What are the reasons why you don‘t patronize this pawnshop?
Kindly rank your answers from a scale of 5 to 1 where in: Legend: 5-Highly Significant 4-Moderate Significant 3-Significant 2-Less Significant 1-Not Significant Reasons | 5 | 4 | 3 | 2 | 1 |
