Sustaining human capital through inclusive household finance: Gold-backed pawning as a pathway toward sustainable medical education financing

Abstract

Background: Sustainable human capital development in low- and middle-income countries depends on households' capacity to withstand financial shocks that threaten educational continuity. In Indonesia, the escalating cost of medical education has intensified household financial vulnerability, particularly where formal student loans and bank-based credit remain limited, raising concerns for the long-term sustainability of the medical workforce pipeline. This paper examines gold-backed pawning, primarily through Indonesia's state-owned institution PT Pegadaian, as an inclusive financing mechanism that supports sustainable household livelihoods by providing rapid, collateralized liquidity without reliance on credit scoring. Methods: Using a narrative–conceptual review design, this study synthesizes interdisciplinary evidence from 45 Scopus-indexed studies (2010–2023) on household finance, Islamic pawnbroking (ar-rahn), digital financial innovation, and medical education financing, integrating empirical and theoretical perspectives on how household gold functions as an emergency liquidity buffer for sustaining human capital investment, and how Pegadaian operationalizes inclusive, Sharia-compliant, digitally enabled (e-gadai) access aligned with inclusive and sustainable development goals. Findings: Gold-backed pawning commonly bridges short-term liquidity gaps for tuition arrears, clinical rotation fees, certification costs, and health-related shocks that threaten educational continuity, offering a more sustainable alternative to unstructured coping strategies such as productive-asset liquidation or high-cost informal borrowing. However, the literature also highlights persistent risks, including short loan tenors, exposure to gold price volatility, information asymmetry in loan-to-value (LTV) structures, and repeated reliance among vulnerable households, which may undermine the long-term sustainability of household welfare if left unmanaged. Conclusion: Gold-backed pawning can be reframed from an ad hoc coping strategy into a structured, sustainable liquidity instrument for human capital financing, provided it is embedded within stronger consumer protection, financial literacy, and institutional partnership arrangements that safeguard household economic resilience over time. Novelty/Originality of this article: This paper proposes a novel four-pillar "Gold-for-Education" framework integrating household and community-level gold holdings, Pegadaian and partner institutions as gold-based intermediaries, Islamic social finance overlays such as cash waqf and corporate social responsibility mechanisms, and targeted disbursement pathways aligned with the medical education pipeline — offering a structured, sustainable model for inclusive human capital financing in developing economies.