MEXICO CITY — Aurora Rico Torres is hosting a big holiday party this week, part of a nine-day celebration leading up to Christmas. Before buying the \o7pozole\f7, punch and pinatas, she took part in another Mexican tradition: pawning.
On a recent afternoon, the young homemaker went to El Nacional Monte de Piedad\o7, \f7or\o7 \f7National Mountain of Pity pawnshop, to hock her $250 diamond bracelet and gold earrings to help fund the celebration.
Looking bewildered among the snaking lines of customers, Rico confessed: "It's my first time here."
It probably won't be her last. Many Americans consider pawnbrokers to be lenders of last resort. But for millions of credit-deprived Mexicans, the pawnshop is the only option for obtaining a loan.
That kind of demand is driving fast growth in the industry here. Pawnshops are unregulated in Mexico, so reliable figures on the number of outlets are not available. But there's little doubt that local outfits are expanding while U.S. companies such as Mister Money-USA Inc. are aggressively moving south of the border.
The Fort Collins, Colo.-based chain has 22 locations in Mexico and is planning 20 more in the next three years, said Tim Lanham, president of the privately held company.
"We're putting all of our growth into Mexico right now," he said. "The return on your investment is better than in the United States."
Mexican pawnshops do a brisk trade year-round. But December and January are the busiest months. That's when consumers pawn household goods to pay off extra bills. Others comb the aisles of forfeited merchandise looking for bargain Christmas gifts.
Rico was disappointed with the $50 that she got for her lot. But her fiesta-financing scheme is more troubling for Mexico. The nation's economy isn't expanding fast enough to generate sufficient jobs and prosperity for its 105 million people.
Most Mexicans still lack bank accounts. Fewer than 15% have credit cards. The world's 10th-largest economy runs largely on cash.
Despite a surge in new lending in recent years, Mexico remains one of Latin America's most credit-poor nations. The dearth of lending to help many Mexicans build homes and businesses -- and to make household purchases -- is retarding economic growth while nurturing tax evasion and the underground economy.
"It is hurting Mexico's development and competitiveness," Gustavo del Angel, an economics professor at the Center for Economic Research and Teaching in Mexico City, said of the nation's credit crunch.
