The Vulnerability of Rural Banks to Investment Frauds: A Lesson From Victims’ Stories

Abstract

Investment frauds have emerged in recent years and resulted in the financial and social losses. A number of investors, as victims, are suffered from the frauds and this may also be faced by rural banks. This study aims to understand investment frauds from the perspective of victims and those who are concerned with the frauds, and to identify the vulnerability of rural banks to the frauds. This study employed media-based phenomenology method. Data were collected from statements of victims released in the national medias. This study revealed that investment frauds are learned behaviors that can be imitated by the fraudsters with similar ways and have four main dimensions, namely: unrealistic investment returns, aggressive offering styles, unclear investment projects, and unusual investment management. These findings imply that rural banks should be careful in evaluating investments offered by those who promise extremely high return, offer investment by fostering and rushing styles, propose unclear form of investment and strange investment management. Finally, this study suggested that financial authorities should release more proper regulations to protect rural banks from investment frauds