Pyramid schemes – concept and functioning models
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Abstract
The progressive development of financial markets contributes to the emergence of economic operators which, by offering substantial returns, encourage potential investors who are not fully aware of the risks associated with a particular financial investment. As a result, there are more and more entities whose activities can be described as pyramid schemes. The aim of this article is to present the key features of pyramid schemes in the context of their models and the bases of their functioning. The analysis of the pyramid schemes in Poland indicates that these entities have similar features and models of operation enabling them to attract as many investors as possible. In most cases they offer a high return on investment with a relatively or very low investment risk. Their offer is based on unsecured investments and complex or unclear investment strategies.
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