EXHIBIT 5


                [LETTERHEAD OF PALMER & DODGE LLP APPEARS HERE]




                                  May 29, 1997


Medallion Financial Corp.
205 East 42nd Street, Suite 2020
New York, New York  10017

Ladies and Gentlemen:

     We are rendering this opinion in connection with the Registration Statement
on Form S-8 (the "Registration Statement") filed by Medallion Financial Corp.
(the "Company") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, on or about the date hereof.  The Registration
Statement relates to 100,000 shares (the "Shares") of the Company's Common
Stock, $0.01 par value, offered pursuant to the provisions of the Company's Non-
Employee Director Stock Option Plan (the "Plan").

     We have acted as your counsel in connection with the preparation of the
Registration Statement and are familiar with the proceedings taken by the
Company in connection with the authorization, issuance and sale of the Shares.
We have examined all such documents as we consider necessary to enable us to
render this opinion.

     Based upon the foregoing, we are of the opinion that, when issued in
accordance with the terms of the Plan and the options or other rights granted
thereunder, the Shares will be duly authorized, validly issued, fully paid and
nonassessable.

     We hereby consent to the filing of this opinion as a part of the
Registration Statement.


                                       Very truly yours,



                                       /s/ Palmer & Dodge LLP