Pyramid Scheme

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Pyramid schemes in albania essay 1- Introduction At the beginning of the year's 1990th, with the falling of the communism, many Albanians people went through the foreign embassy to left Albania and go abroad for a better life. They started to create a real income. In this time we have some mountebanks in the market which created the pyramid schemes and offered high interest rate. People invested in this scheme their savings. According to the data of the different official institutions, the number of the Albanian which invested in schemes is increased time after time. Deposits of these schemes take e big part of the GDP. This means that they have had an important role in our economy. Through this paper we want to give a general overview…show more content…
4. Xhaferri was created by Rrapush Xhaferri spin off from Populli. At time of collapse its debt was over $300 million. This scheme attracted over 1 million depositors. 5. Maksude Kademi the president of Sude started its activity as a leading lottery in a shoe factory where she worked. After that Sudeoperated as a pyramidal scheme. This was the first scheme that fell on November 1996 and its debt ranged $40-90 million and had no assets. Other pyramidal schemes were: Kamberi, Silva, Cenaj&Co, ect. All of dates ore taken by Chris Jarvis, 2000: p 11. 2.2-Favorable factors As we all know Albania was a communist country for many years and has followed a centralized economy under Dictator Enver Hoxha, who isolated the country from other countries. This made that the process of crossing in open economy has been very difficult for Albanians. The population was uninformed, uneducated with market structures and the way of how capitalism worked. This fact, the lack of private property and big poverty made people easily fall prey of these deceptions. (Jarvis, 2000: p.7) Another factor that has favored the establishment of these schemes was the lack of formal market. There were only 3 banks that operate in the market, taking deposits and possessed 90% of deposits, which were not reliable intermediary (Bank of Albania, 2003). The problem with the existing banks was not lower interest rates but the system of payments was inadequate for a simple
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