Mafia infiltrations in times of crisis: evidence from the Covid-19 shock

Marco Castelluccio () and Lucia Rizzica ()
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Marco Castelluccio: University College London and Institute for Fiscal Studies
Lucia Rizzica: Bank of Italy

No 1502, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We analyse the risk of mafia infiltration into firms operating in the legal economy. To address potential endogeneity concerns, we exploit the sharp drop in revenues caused by the Covid-19-related lockdowns imposed in Italy in spring 2020. We find that the induced sudden and significant deterioration in firms' financial conditions increased the likelihood of infiltration by mafia-connected entrepreneurs: a 10 per cent drop in revenues leads to a 4.9 per cent increase in the probability of mafia infiltration. Although the overall prevalence of – and therefore the induced increase in – infiltrated firms is limited in absolute terms, the estimated effect is non-negligible given its implications for the legal economy. We further show that firms are more likely to resort to mafia-linked lending when they face temporary difficulties in repaying their debts.

Keywords: organized crime; firm performance; Covid-19 (search for similar items in EconPapers)
JEL-codes: D22 G32 K42 (search for similar items in EconPapers)
Date: 2025-10
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