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Ponzis : The Science and Mystique of a Class of Financial Frauds / Basu, Kaushik
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Basu, Kaushik
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Finance.
- Debt Markets.
- Economic Theory & Research.
- Emerging Markets.
- Finance.
- Finance and Financial Sector Development.
- Fraud.
- Global Financial Crisis.
- Macroeconomics and Economic Growth.
- Markets & Market Access.
- Private Sector Development.
- Pyramid Schemes.
- Stock Options.
- Local Subjects:
- Access to Finance.
- Debt Markets.
- Economic Theory & Research.
- Emerging Markets.
- Finance.
- Finance and Financial Sector Development.
- Fraud.
- Global Financial Crisis.
- Macroeconomics and Economic Growth.
- Markets & Market Access.
- Private Sector Development.
- Pyramid Schemes.
- Stock Options.
- Physical Description:
- 1 online resource (15 pages)
- Other Title:
- Ponzis
- Place of Publication:
- Washington, D.C., The World Bank, 2014
- System Details:
- data file
- Summary:
- Ponzis are among the most ubiquitous and least understood phenomena of economic life. They acquired a certain salience with the global financial crisis of 2008 and the crash of Bernie Madoff's celebrated Ponzi scheme. This paper explains the structure of Ponzi schemes and goes on to argue that what makes this such a troubling phenomenon is its ability to be camouflaged amidst legitimate practices. It is shown, for instance, that the common practice of giving stock options to employees could be a potential Ponzi that allows corporations to flourish for a while by borrowing from its own future. The paper goes on to discuss the need for intelligent regulation to incise harmful Ponzis (not all Ponzis are harmful) while taking care not to damage other legitimate activities that surround them.
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