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Revealing “Mafia Inc.”? Financial crisis, organized crime, and the birth of new enterprises

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  • Marco Le Moglie
  • Giuseppe Sorrenti

Abstract

We study the investment of organized crime in the legal economy. By using the shock induced on the Italian credit market by the 2007 subprime mortgage crisis, we document how provinces with a high organized crime presence have been impacted less by the crisis in terms of the establishment of new enterprises than provinces with a lower criminal infiltration. We provide evidence that the lower impact of the crisis is consistent with the presence of investments by organized crime in the legal economy. We corroborate this interpretation by comparing our results with the characterization made by the judicial authority of such investments and ruling out possible alternative explanations.

Suggested Citation

  • Marco Le Moglie & Giuseppe Sorrenti, 2017. "Revealing “Mafia Inc.”? Financial crisis, organized crime, and the birth of new enterprises," ECON - Working Papers 251, Department of Economics - University of Zurich, revised Dec 2019.
    • Handle: RePEc:zur:econwp:251
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    Cited by:

    1. Tomas Williams & Pablo Slutzky & Mauricio Villamizar-Villegas, 2019. "Drug Money and Bank Lending: The Unintended Consequences of Anti-Money Laundering Policies," Working Papers 2019-5, The George Washington University, Institute for International Economic Policy, revised May 2020.
    2. Francesca Calamunci & Francesco Drago, 2020. "The Economic Impact of Organized Crime Infiltration in the Legal Economy: Evidence from the Judicial Administration of Organized Crime Firms," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(2), pages 275-297, July.
    3. Maria Rosaria Alfano & Claudia Cantabene & Damiano Bruno Silipo, 2019. "Mafia Firms and Aftermaths," Working Papers 2019.21, Fondazione Eni Enrico Mattei.
    4. Murphy, Tommy E. & Rossi, Martín A., 2020. "Following the poppy trail: Origins and consequences of Mexican drug cartels," Journal of Development Economics, Elsevier, vol. 143(C).
    5. Drago, Francesco & Calamunci, Francesca, 2020. "The economic impact of organized crime infiltration in the legal economy: evidence from the judicial administration of organize," CEPR Discussion Papers 14326, C.E.P.R. Discussion Papers.
    6. Gianmarco Daniele & Gemma Dipoppa, 2018. "Doing Business Below the Line: Screening, Mafias and Public Funds," BAFFI CAREFIN Working Papers 1898, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    7. Nicola Mastrorocco, 2018. "Organised Crime, Captured Politicians and the Allocation of Public Resources," Trinity Economics Papers tep1018, Trinity College Dublin, Department of Economics.

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    More about this item

    Keywords

    Mafia; organized crime; established enterprises; crisis;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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