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Anti-Mafia Law Enforcement and Lending in Mafia Lands. Evidence from Judicial Administration in Italy

Author

Listed:
  • Calamunci Francesca M.

    (University of Catania, Piazza Università, Catania95124, Italy)

  • De Benedetto Marco Alberto
  • Silipo Damiano Bruno

    (University of Calabria, Via Ponte Pietro Bucci, Arcavacata di Rende87036, Italy)

Abstract

The paper analyses the impact of a preventive measure aimed at fighting the criminal organizations’ activities on the bank-firm relationship in the four Italian regions with the highest density of mafia over the period 2004–2016. Taking advantage of the staggered firm-level anti-mafia enforcement actions, we implement a difference-in-differences approach and find that after entering judicial administration mafia-infiltrated firms experience a 19 per cent contraction of bank credit and have a higher probability of being credit rationed than a matched sample of legal companies. We also find that firms confiscated from the mafia experience a negative change in some demand-driven (value of production) and supply-driven (profitability) determinants of loans. Finally, we study whether confiscation of infiltrated firms produces externalities on non-infiltrated companies, and show that banks do not reassess the overall credit risk in local markets.

Suggested Citation

  • Calamunci Francesca M. & De Benedetto Marco Alberto & Silipo Damiano Bruno, 2021. "Anti-Mafia Law Enforcement and Lending in Mafia Lands. Evidence from Judicial Administration in Italy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(3), pages 1067-1106, July.
    • Handle: RePEc:bpj:bejeap:v:21:y:2021:i:3:p:1067-1106:n:9
    DOI: 10.1515/bejeap-2020-0353
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    More about this item

    Keywords

    organized crime; bank loans; credit rationing; firm-level data;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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