As mankind's oldest financial institution, pawn broking carries on a tradition with a rich history. Pawn Broking can be traced back at least 3,000 years to ancient China, and has been found in the earliest written histories of Greek and Roman civilizations.

During the Middle Ages, certain usury laws imposed by the Church prohibited the charging of interest on loans, thus limiting pawn broking to people who had religious beliefs outside of the Church. Out of economic necessity, and because of problems in the banking system, pawnshops made a resurgence in later years. The House of The Lombards operated pawnshops throughout Europe. They even counted royalty, such as King Edward III of England, among their clientele during the 14th century. The symbol of the Lombards operations were the three gold balls that still remain the trademark of pawnshops.

Pawnbrokers, also known as collateral loan brokers, make loans based purely on the intrinsic value of the collateral. Checking the customer's credit history is not necessary because only the value of the item being pawned is considered. If the loan, or at least the interest, is not paid off during the specified term (usually three or four months), the item is forfeited and may be resold by the broker.

A typical transaction begins with a potential borrower coming into a pawnshop with the item he or she wants to pledge. The pawnbroker then determines how much to loan the patron for the item. Loans are paid out at a rate of about one-third to one-half of the price the broker can expect to receive for the sale of a good during the worst of times. This assures that a profit will be made.

Pawning has long been a source of capital for people in times of need, as well as a means of financing business ventures.

Today, statutory regulations of banking and finance are based on the legal foundation established by pawnbrokers. Many of the first leaders in the banking industry had roots in pawn broking. As was the case 3,000 years ago, pawnshops continue to be a source of convenient credit for individuals in need of a short-term loan.