Features of Functioning of Pyramid Schemes and their Impact on Development of the Financial Services Market of Ukraine
Journal Title: Бізнес Інформ - Year 2015, Vol 5, Issue 0
Abstract
The article explores essence of category of «pyramid scheme» using basic scientific approaches to its understanding. In particular, has been proposed to consider the indicated category as follows: pyramid scheme is a form of business organization, which does not provide for neither production of goods nor provision of services, maintains its existence by means of the mandatory, permanent membership fees or other charges which are not used for the production of legal, legislation-based, financial activities to generate income, but to enrich, first and foremost, the founders of such schemes through the redeployment of funds accumulated in the course of operation of a financial pyramid in favor of the small number of participants, which is accompanied by existence of a large number of defrauded clients of financial services by such structures. Also identified and systematized are the basic characteristic features of pyramid schemes, which include the following: absence of licensing for implementation of the relevant activities at the financial services market, mandatory paying the registration fee, absence of any kind of refunding in the contract, psychological influencing by the owners of financial pyramid on their potential customers, aggressive marketing policy to attract financial resources, creating complex organizational structures of management of financial pyramid, the clients of pyramid schemes must become its members and employees, extremely high payments are made to benefit of the initial clients, amount of these payments does not correspond to the real situation on the market of financial services. On the basis of results of the study, mechanism for operation of financial pyramids has been described and a retrospective analysis of their development in Ukraine has been conducted.
Authors and Affiliations
Yu. ProkopenkoValeriia, Maksym Dubyna, Kateryna Kovalenko
Keywords
Related Articles
- EP ID EP158580
- DOI -
- Views 83
- Downloads 0
Directions of Improvement of International Leasing Mechanisms in Ukraine
The goal of the article lies in the study of the market of leasing services in Ukraine and development of practical recommendations on improvement of leasing activity mechanisms in international business. Analysing and g...
The Theoretical Basis of the Study of Global Competition
The article deals with theoretical and methodological approaches to the analysis of global competition. Evolutionary stages in the development of economic thought to the competition and the international division of labo...
Endowment Fund as an Alternative Source of Financing Higher Education
The article discusses the essence, objectives, main features and purposes of establishing the endowment funds. Historical backgrounds and main stages of development of the largest and most famous endowment funds raised i...
Substantive Global Challenges to Development of the World Economy and their Influence upon the Economic Security of a State
The article studies substantive global challenges to development of the world economy under the conditions of intensification of the processes of integration, trans-nationalisation and globalisation of the world economy...
Institutional Design of the Capital Market as an Economic Category
The purpose of the article is to reveal the content of the institutional design of the capital market in terms of backwardness of the institutional environment, where the capital market itself externally looks like the m...