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The Rise and Fall of the Pyramid Schemes in Albania

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  • Christopher J. Jarvis

Abstract

What lessons can be drawn from the unprecedented growth and spectacular collapse of financial pyramid schemes in Albania? This paper discusses the origins of the pyramid schemes and the way the authorities handled them. It also analyzes the economic effects of the pyramid schemes, concluding that despite the descent into anarchy triggered by the schemes’ collapse their direct effects on the economy are difficult to specify and appear to have been limited. Finally, the paper argues that prevention of pyramid schemes is better than cure, and that governments and international financial institutions should be vigilant in clamping down on frauds.

Suggested Citation

  • Christopher J. Jarvis, 1999. "The Rise and Fall of the Pyramid Schemes in Albania," IMF Working Papers 99/98, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:99/98
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    Cited by:

    1. Robert J. Shiller, 2003. "From Efficient Markets Theory to Behavioral Finance," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 83-104, Winter.
    2. Lucica Matei & Spyridon Flogaitis (ed.), 2011. "PUBLIC ADMINISTRATION IN THE BALKANS - from Weberian bureaucracy to New Public Management," ASsee Online Series, South-Eastern European Administrative Studies – ASsee Online Series, volume 1, number 1, January.
    3. Ana Carvajal & Jennifer A. Elliott, 2009. "The Challenge of Enforcement in Securities Markets; Mission Impossible?," IMF Working Papers 09/168, International Monetary Fund.
    4. Cortés, Darwin & Santamaría, Julieth & Vargas, Juan F., 2016. "Economic shocks and crime: Evidence from the crash of Ponzi schemes," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 263-275.
    5. Baddeley, M.C., 2008. "Poverty, Armed Conflict and Financial Instability," Cambridge Working Papers in Economics 0857, Faculty of Economics, University of Cambridge.
    6. Tony Addison & Philippe Le Billon & S. Mansoob Murshed, 2001. "Finance in conflict and reconstruction," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(7), pages 951-964.
    7. Philipp Rother, 2002. "Inflation in Albania," Post-Communist Economies, Taylor & Francis Journals, vol. 14(1), pages 85-107.

    More about this item

    Keywords

    Albania; Financial crisis; Pyramid schemes; Ponzi schemes; pyramid scheme; law enforcement; criminal activities;

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