Revealing “Mafia Inc.”? Financial Crisis, Organized Crime, and the Birth of New Enterprises

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.

Venture resilience, criminal approaches and the welfare state: entrepreneurial decisions and opinions one year after the COVID-19 outbreak

“…When the economy is stagnant, entrepreneurs may resort to private protection and financial resources provided by OC as a tool to avoid bankruptcy (De Martiis, 2020). This phenomenon is the “last resort effect” of OC investment in the legal economy (Le Moglie and Sorrenti, 2020), avoiding SMEs' liquidation. However, OC presence in the post-COVID-19 crisis has also produced a “disruptive effect” due to severe usury and racketeering practices, exacerbated during recessions (Le Moglie and Sorrenti, 2020).…”

“…This phenomenon is the “last resort effect” of OC investment in the legal economy (Le Moglie and Sorrenti, 2020), avoiding SMEs' liquidation. However, OC presence in the post-COVID-19 crisis has also produced a “disruptive effect” due to severe usury and racketeering practices, exacerbated during recessions (Le Moglie and Sorrenti, 2020).…”

Do Catch Shares Increase Prices? Evidence from US Fisheries

“…Before presenting results, we evaluate whether each fshery DID model is well identifed by conducting parallel trends tests and falsifcation tests. Parallel trends testing is intended to assess whether the treatment and control are driven by the same underlying forces, whereas falsifcation testing examines whether there is some other explanation besides treatment for efects observed on the treated units (St. Clair and Cook, 2015;Le Moglie and Sorrenti, 2022;Cunningham, 2021).…”

“…Consequently, the tests appear similar despite having diferent rationales. They typically include visual inspection of event study diagrams and formal testing for departures from a trend (or diferences between treatment and control) in individual periods pre-treatment (Steinmayr, 2021;Le Moglie and Sorrenti, 2022). In our empirical setting, however, this approach is not possible because we have no within-period variation.…”

Anti‐Mafia Police Actions, Criminal Firms, and Peer Firm Tax Avoidance

“…Similar to Colonnelli and Prem [2022], who find that crime and corruption hampers local economies, Pinotti [2015] shows that Mafia harms the economic development of the regions where it operates. Mirenda, Sauro, and Rizzica [2019] likewise find that Mafia infiltration damps local economic growth in the long run, and Moglie and Sorrenti [2020] examine the 2008 financial crisis and document the presence of investment by the Mafia in legitimate businesses. We add to this literature by investigating the microlevel channels through which crime affects the real economy, especially its impact on firm outcomes.…”