Governments and donor agencies have funded numerous credit programs directed at small rural enterprises in low-income countries. Formal lenders face severe challenges in penny economies. Particularly in Europe, private pawnbrokers were pictured as being evil Scrooges, and public-spirited citizens and the clergy in Europe championed public pawnshops run by the state or municipality. Pawnbroking allows the lender a much larger circle of borrowers and greatly increases his loan volume potential, thus eliminating a stumbling block for lending in a penny economy. Pawnbroking is usually for short periods—one to six months—which suits participants in a penny economy. The Peoples' Bank was the first institution in Sri Lanka to face the challenge of rural mass lending by providing pawning services. In villages and small rural towns there are many new entrants into the market of private pawnbroking.
Bouman, F. J. A., & Bastiaanssen, R. (1992). Pawnbroking and small loans: cases from India and Sri Lanka. In D. W. Adams, & D. A. Fitchett (Eds.), Informal finance in low-income countries (pp. 181-194). Westview Press. https://doi.org/10.4324/9780429034572-13