Victim Characteristics of Investment Fraud

Lee, Steven James; Cummings, Benjamin F.; Martin, Jason

doi:10.2139/ssrn.3258084

Cited by 5 publications

(3 citation statements)

References 7 publications

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“…These findings suggest that concerns expressed in Fisch et al (2020), Ryan et al (2011), andAgarwal et al (2009) regarding executive function, aging, and cognitive decline are addressed through increased preference for delegation. Although Langevoort (1996) and Lee et al (2019) suggest principal agent concerns related to delegation, recent study by FINRA addressing older investor vulnerabilities, contribute to our positive interpretation of the value of delegation for this group (FINRA, 2020).…”

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confidence: 74%

“…If trust and financial literacy each play a role in facilitating investment, a natural question is whether there is a relationship between the two. Although intuitively it might seem as although financial literacy could offset trust and reduce vulnerability to fraud, some recent research finds that highly educated wealthy people in peak savings years ahead of retirement may be particularly vulnerable to being scammed (Lee et al, 2019). High levels of trust, particularly by unsophisticated investors, may increase vulnerability to purchasing unsuitable investments and even to experiencing outright fraud (Hackethal et al, 2012).…”

Section: Summary Of the Literaturementioning

confidence: 99%

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Trust, financial literacy, and financial market participation

Fisch

Seligman²

2021

Journal of Pension Economics and Finance

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Willingness to participate in financial markets is important for financial well-being, including the accumulation of retirement savings through self-directed pension programs. We consider the roles of two key factors, trust and financial literacy in financial market participation. We find both are strongly related to participation. Although trust is more uniformly correlated with increases in financial market participation, the relationship between financial literacy and engagement is u-shaped, with increases in financial literacy first associated with reductions and subsequently with increases in the levels of participation. Our findings suggest trust and financial literacy play different roles and that each is related to investment behaviors in important ways.

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confidence: 74%

Section: Summary Of the Literaturementioning

confidence: 99%

Trust, financial literacy, and financial market participation

Fisch

Seligman²

2021

Journal of Pension Economics and Finance

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“…They found five early warning signs which indicate the fraudulent nature of investment schemes, namely, schemes offering high returns, salesperson of plans forcing people to immediately subscribe to the scheme, unreasonable underlying core business, no explanation of how the funds will be managed and investments without information of the structure of management, ownership, business and address of the company. Another similar study done by Lee et al (2019) found that the fraudsters use five tools, namely, noble pursuits, perceived success, an air of familiarity, claim to authority and framed authenticity which stops the need for further investigation by individuals, and they succumb to becoming the prey.…”

Section: Literature Reviewmentioning

confidence: 90%

Victimisation of investors from fraudulent investment schemes and their protection through financial education

Singh¹,

Misra²

2022

JFC

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Purpose The purpose of this study is to identify the significant demographic and socio-economic characteristics of individuals who are likely to invest in a fraudulent investment scheme. It also quantifies the extent to which financial literacy helps in reducing the odds of investments in such schemes. Based on these findings, it provides policy recommendations to regulators and governments. Design/methodology/approach This study uses nationally representative data from the “India Assessment of Financial Capability 2018” survey. It further uses logistic regression with a binary outcome variable to assess the individual-level odds of investments in fraudulent investment schemes. Findings This study concludes that males between 40 and 59 years of age, who are well-educated (are at least graduates), score low in financial literacy, belong to the middle-income group, and SEC A3 households are most vulnerable to victimization by financial fraudulent investment schemes. It finds that financial literacy significantly reduces the odds of investment into fraudulent schemes to the extent of 39.118%. Originality/value This study quantifies the extent to which financial literacy helps in reducing the odds of individual investments in a fraudulent investment scheme. As financial literacy has a significant and negative relationship with the likelihood of investment in such schemes, this study provides policy interventions and recommendations to regulators and governments to safeguard the interest of individual investors.

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Policing telecommunication and cyber fraud: Perceptions and experiences of law enforcement officers in China

Qu,

Cheng

2024

Crime Law Soc Change

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Victim Characteristics of Investment Fraud

Cited by 5 publications

References 7 publications

Trust, financial literacy, and financial market participation

Trust, financial literacy, and financial market participation

Victimisation of investors from fraudulent investment schemes and their protection through financial education

Policing telecommunication and cyber fraud: Perceptions and experiences of law enforcement officers in China

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