Corporate frauds and its effect on economy
Corporate fraud and its effect on economy in economic world means unwanted activities perfomed by an individual or company in illegal and dishonest manner resulted its effect on economy negative side.
Impact of corporate farud has continuous challenges facing by every country of the world. There are many types of corporate fraud and its effect on economy of depending on economic condition of particular country.
Particular country economy has to pay lot where corporate farud and its effect on economy happened inside market of the country.
Corporate farud effect on economy of the particular country resulted in fallen of reputation of local companies of the country inside market (national market and international markets).
Any type of illegal activities perfomed by individuals or company inside buisness keeping bad intension in mind called corporate fraud.
Corporate fraud can be defined as hidden activities happened inside any buisness without following specific legal procedures to achieve profit to individuals or company.
Economic learning researchers found that two famous corporate fraud of home loan from economic history of United States. Many countries of the world became very alert after seeing corporate fraud of home loan bubble in United States.
Many countries of the world alert to manage corporate fraud and its effect on economy in continuation formed committee to check and regulate internal management of corporate sector operating inside country economy or country territory.
Corporate frauds impact on development of economies because it caused various types of investments risks on investment made by investors.
Corporate fraud made of two words corporate word means buisness and fraud words means in economic is criminal deception done or intended to achieve gain financial advantages to persons, individual and company.
Corporate fraud in any corporate sector buisness designed in such a manner to provide financial advantage to a people, individual and company involved in corporate sector buisness.
Corporate fraud designed with complexity which schemes goes beyond expectations of employees expectations and it's impact on development of economy very bad.
Economy of a country totally get effected by corporate fraud because its impact on economy development cover all employees.
When any company involved in ilegal activities then it start hiding some information from his customers and provide false accounting, miss printing or services to his customers, investors.
Impact of corporate frauds on Indian economy
Corporate fraud can be conducted in various type inside corporate sector buisness. We can see huge impact of corporate fraud on Indian economy. India economy is very large size and many people from inside India and outside invested their money in India economy.
If any type of corporate fraud conducted inside India corporate buisness then investors start losing trust from India economy. Corporate fraud will reduce the trust of investors from india economy and this will directly show impact development of India economy.
India economy work on proper cash flow inside India market but due to corporate fraud conducted inside any buisness of corporate sector will act as stoppages barrier of cash flow inside economy. Corporate fraud directly slow down speed of cash-flow inside India economy and will shows negative impact of Indian economy development.
Impact of corporate fraud on India economy are beyond the expectations of immediate victims and to understand impact of various types of corporate fraud on India economy in following points given below:-
- Confidence of investors got destroyed from india stock market due to increase of corporate fraud at alarming rate inside India economy.
- Destruction in wealth of investors clearly seen in corporate fraud situation. Investors money comes under investment risk and get loss due to conducted corporate fraud.
- Corporate fraud conducted inside any buisness company by any individual, people will result in damage of reputation of that company inside market and social image also damaged.
- Corporate fraud brings economic crime and economic offences which curb economy growth.
- Financial instability of India economy caused in India economy due to impact of corporate fraud on India economy.
- Corporate fraud when become out of control can show impact on India economy and can threatened national security.
Lets take help of an examples of corporate frauds from past experiences to understand impact of corporate fraud on India economy growth.
Fraud of Maharashtra and punjab comparative bank caused inocent 9 life death of investor and depositors.
According report 2020-21 published by Reserve Bank of India (RBI) bank fraud above ₹ 1 lakh recorded in previous fiscal year ₹ 1.38 trillion. 15% percent decline in bank fraud recorded in RBI published reports on bank fraud 2020 - 2021.
From the report RBI published on bank fraud share distributed all over country banks. PSBs bank hold share 59% percentage of bank fraud amount ₹ 81,901 crore in financial year 2021.
33% percent of bank fraud share holder by private sector banks recorded in report published by RBI of financial year 2021.
What can be the impact of corporate fraud on the economy
Corporate fraud effect in the development of the economy because investors lose beleive from stock market, various types of economic crime results in disturbance of proper cash flow inside market. Corporate frauds effect in the development of the economy results threatened to country securities.
Many cases recorded where bank depositers died due to effect of corporate fraud on the banking sector.
Effects of frauds in business and effect on economy
Every year all around word corporate fraud give its effect of frauds in business activities. Many countries' economy development slow down and some cases totally stopped due to effect of frauds in business running inside a country.
Effects of frauds on business clearly seen in a country were frauds causes significant losses to investors, shareholders and creditors of the targeted company.
Effects of fraud in buisness seen when low quality of products and services are provided to customer. Customers don't get proper value for their money spending and utility derived after consumption of goods and services very low class.
Customers protection not present and not get full details of terms and conditions of products and services they are purchasing for consumption. Corporate fraud doing peoples, individual and company hides there profit making details from customer, investors.
Business functions get unorganised due to effect of corporate fraud on business because proper marketing segmentation of doing business got break up and suitable decision of doing business not present. Due to absence of discipline in business doing results total miss management of buying and purchasing.
Company reputation and value degradation caused inside market and investors stop there new investment in a corporate sector of a country due to effects of frauds in business.
Many times corporate fraud in business results in complete money lose of investors who invested their hard earned money in business with hope of getting profit in future market situation. Corporate fraud have triggered many times to death of many investors and money creditors.
Corporate fraud impact on business makes market structure distorted. Effects of corporate fraud on buisness increased large number of those people inside market who want to take illegal competitive advantages from other running similar type of buisness inside same market.
Types of corporate frauds on Indian economy
9 type of corporate fraud
Consequences of frauds to public sector
Effects of fraud in business results in erosion of trust of investors, creditors and individuals from a buisness working inside market. Consequences of frauds to public sector very huge because public sector required financial support to function effectively but consequences of frauds to public sector stop development.
Economy development of a country get stop due to consequences of frauds to public sector. Public sector play an important role in economy development.
Public sector development dependent on trust, proper cash flow and management. Various types of effects of fraud on public sector like fraud on bank, frauds on corporate sector and fraud in business activities stop development rate of economy. And when economy development of a country not happening then public sector do not show development.
Causes of corporate fraud in India
Causes of corporate fraud in India are of many types. Flow of cash released as fund to top members of management team. India corporate fraud survey found three main reason which causes of corporate fraud in India.
a. Lack of internal ethical control.
b. Diminishing ethical values of people involved in corporate in India.
c. Senior authority override control over corporate in India.