The effectiveness of a certification of legality. Evidence from Italian firms

Maria Rosaria Alfano, Claudia Cantabene and Alessandro de Iudicibus

MPRA Paper from University Library of Munich, Germany

Abstract: Over the past decade, Italy has enacted a variety of measures to combat organized crime. White lists of legitimate businesses, established within each Italian prefecture, are a strategic tool to thwart mafia encroachment in the sectors most susceptible to infiltration. By replacing anti-mafia documentation, this mechanism fosters trust in the legality of enterprises among potential clients, suppliers, and financial institutions. Drawing on an extensive firm-level dataset, we employ a comprehensive, generalized difference-in-differences design to investigate the consequences of such certification on firms’ access to credit and their profitability. Our findings indicate that this certification engenders tangible positive effects on firms’ performance, manifested in improved credit access and enhanced profitability. Notably, the impact on banking obligations is particularly pronounced in regions where organized crime is more prevalent, such as the Southern regions of Italy. Conversely, the effect on profitability appears to be more accentuated in the North. These effects are more pronounced for firms that maintain certification over multiple years.

Keywords: White List; Organized crime; Certification; Reputation; DID (search for similar items in EconPapers)
JEL-codes: C21 H40 H81 R38 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-eff, nep-law and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:120306

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