Profiling the Victims of Ponzi Schemes: The Role of Financial Literacy

Abdur Rafik (), Dwipraptono Agus Harjito (), Bagus Panuntun () and Anisa Rahmadani ()
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Abdur Rafik: Universitas Islam Indonesia
Dwipraptono Agus Harjito: Universitas Islam Indonesia
Bagus Panuntun: Universitas Islam Indonesia
Anisa Rahmadani: Universitas Islam Indonesia

A chapter in Eurasian Business and Economics Perspectives, 2023, pp 299-309 from Springer

Abstract: Abstract In many countries, including Indonesia, the number of victims of investment fraud is still vast, even though prevention efforts from juridical and non-juridical aspects have been carried out. Generally, victims fall into this investment trap because they are attracted by the promise of return far exceeding the average market return. This study attempts to profile the victims of investment fraud by analysing whether or not the financial literacy of the victims is lower than the financial literacy of those who are non-victims. The survey approach was chosen, and questionnaires were distributed conveniently online and offline to those who had experienced and never experienced investment fraud. In total, 267 respondents were collected, of which 80 were the victims of Ponzi, and the remaining 187 were non-victims. The data was then analysed using regression to capture the difference in financial literacy between victims and non-victims. The results found that the victims of Ponzi had lower levels of financial literacy than non-victims. Alternative testing using the vulnerability level to investment fraud as an independent variable also confirmed that those with high exposure to investment scams tend to have lower financial literacy than those with low exposure. This finding confirms the importance of financial literacy as an initial instrument to prevent victims of investment fraud.

Keywords: Ponzi; Investment fraud; Financial literacy; Investment scams; Exposure to scams (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eurchp:978-3-031-36286-6_18

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DOI: 10.1007/978-3-031-36286-6_18

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