The Rise and Fall of the Pyramid Schemes in Albania

Author/Editor:

Christopher J. Jarvis

Publication Date:

July 1, 1999

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1999/098

Subject:

Bank deposits Banking Commercial banks Credit Currencies Exchange rates Financial institutions Foreign exchange Inflation Money Prices

English

Publication Date:

July 1, 1999

ISBN/ISSN:

9781451852127/1018-5941

Stock No:

WPIEA0981999

Pages:

36

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