Theory and practice of a financial pyramid scheme functioning versus a case study of Amber Gold Sp. z o.o. bankruptcy
Journal Title: Zarządzanie i Finanse - Year 2013, Vol 11, Issue 1
Abstract
The growing freedom of economic activity results more and more innovative, but not always in a good sense, business ideas. The authors undertook a description of conditions of institutions' functioning in theory and practice, determined by the market as a financial pyramid. Their operating, based on the limited capacity expansion, in most cases - sooner or later, must lead to collapse of the structure, which in turn means a measurable loss to the participants. An example of the spectacular bankruptcy of Amber Gold Sp. z o.o., which took place in the second half of 2012, became the pretext for the loud discussion on forms of protection against the risk of capital investments in these types of institutions. As shown by the authors of the article, Amber Gold Sp. z o.o. was not a typical form of pyramid scheme, as it was presented in a number of media reports and statements of experts in the field of capital markets and investments. This event, however, initiated a discourse on the direction of changes of bankruptcy regulations that should be implemented in order to protect creditors against unfair economic practices. No centrally imposed regulation, standard, and principle will not substitute the rational and deep analysis of not only benefits - but most of all the risks inherent in investments that should make investors considering alternative directions of capital investment.
Authors and Affiliations
Paweł Antonowicz, Łukasz Szarmach
Keywords
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