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"Mafia Inc.": when godfathers become entrepreneurs


Le Moglie, Marco; Sorrenti, Giuseppe (2017). "Mafia Inc.": when godfathers become entrepreneurs. Working paper series / Department of Economics 251, University of Zurich.

Abstract

We study the investment of criminal organizations in the legal economy. We focus on Italy, a country historically plagued by a conspicuous presence of mafia-type organizations. By using the exogenous credit contraction imposed by the 2007 financial crisis we highlight how the consequences for newly established enterprises have been less severe in areas with organized crime. Although criminal organizations are largely detrimental for local economic conditions, their economic activity might act as an economic stabilizer in the short-run, especially in a context of weak institutional presence. The investment in the legal economy allows criminal organizations to launder money, make profits, and raise social consensus through the provision of alternative sources of social insurance.

Abstract

We study the investment of criminal organizations in the legal economy. We focus on Italy, a country historically plagued by a conspicuous presence of mafia-type organizations. By using the exogenous credit contraction imposed by the 2007 financial crisis we highlight how the consequences for newly established enterprises have been less severe in areas with organized crime. Although criminal organizations are largely detrimental for local economic conditions, their economic activity might act as an economic stabilizer in the short-run, especially in a context of weak institutional presence. The investment in the legal economy allows criminal organizations to launder money, make profits, and raise social consensus through the provision of alternative sources of social insurance.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:K42, L26
Uncontrolled Keywords:Mafia, organized crime, illegal enterprises, financial crisis
Language:English
Date:April 2017
Deposited On:25 Apr 2017 15:51
Last Modified:30 Aug 2017 01:33
Series Name:Working paper series / Department of Economics
Number of Pages:57
ISSN:1664-7041
Official URL:http://www.econ.uzh.ch/static/wp/econwp251.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php

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