Robust growth of consumer finance.

Byline: NAZIR AHMED SHAIKH

Pakistan is likely to make significant progress in the coming years

The concept of consumer finance dates back thousands of years, to the earliest civilizations in Mesopotamia and Egypt. In these societies, merchants and moneylenders would provide credit to customers who needed to purchase goods or services but did not have the immediate funds to do so. Over time, this system evolved and spread throughout the world, becoming a key feature of many different economic systems.

In the middle ages, consumer finance was largely controlled by the Catholic Church, which forbade the charging of interest on loans. This meant that many moneylenders and merchants had to find other ways to make money, such as charging fees or taking a share of the profits from a business. However, by the 16th century, the Protestant Reformation had led to a relaxation of these restrictions, and interest-bearing loans became more common. The Industrial Revolution brought significant changes to the world of consumer finance. New technologies and production methods made it easier and cheaper to produce goods, which in turn led to increased demand for credit. Banks and other financial institutions began to emerge, offering a range of services such as loans, savings accounts, and insurance policies.

In the late 19th century, consumer finance truly began to take shape. The introduction of department stores and mail-order catalogs gave rise to installment credit, which allowed consumers to pay for goods over an extended period of time, rather than all at once. As the 20th century dawned, consumer finance became even more prevalent. The automobile industry, in particular, played a significant role in the development of consumer finance. Auto manufacturers offered financing to buyers, and banks soon followed suit, offering auto loans as well as personal loans.

In the United States, consumer finance began to take shape in the late 19th century when the first consumer credit bureau, the Retail Credit Company (now known as Equifax), was established in 1899. This company collected information about individuals' credit histories and sold it to merchants and lenders. The credit bureau's system enabled lenders to assess the creditworthiness of their borrowers and determine their likelihood of defaulting on loans. The early 20th century saw the establishment of a number of financial institutions specializing in consumer finance. In 1911, the first installment loan company, Household Finance Corporation, was established. This company provided loans to individuals to purchase household items like furniture and appliances. In 1934, the Federal Housing Administration (FHA) was established to provide mortgage insurance to lenders...