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.

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

De Benedetto M. A.;Silipo D. B.
2021

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.
bank loans
credit rationing
firm-level data
organized crime
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/20.500.11770/326633
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