Crime and Credit: Analyzing the Impact of Organized Crime Perceptions on Loan Restrictions

Antonio Fabio Forgione (University of Messina)
Carlo Migliardo (cmigliardo@unime.it)
Marco Spadaro (marco.spadaro1@studenti.unime.it)

Abstract

This study investigates the influence of organized crime on the restriction of credit in Italy. It utilizes a distinctive dataset obtained from a survey carried out by the Bank of Italy, which includes approximately 3000 companies in the industrial and service sectors. The study examines the extent to which the perception of organized crime affects banks' choices to limit credit availability. The results indicate that companies located in regions with a higher perception of organized crime encounter substantial difficulties in obtaining loans, suggesting a clear correlation between the presence of organized crime and heightened credit restrictions. This relationship remains strong and consistent across different specifications of credit rationing and models of firm performance. The analysis also examines the wider economic ramifications of these dynamics, highlighting that organized crime not only hampers firms' credit accessibility but also incurs broader societal expenses, impeding economic growth and development. It is recommended that policymakers take into account the complex relationships between organized crime and financial accessibility, as addressing these effects can result in enhanced firm performance and overall economic welfare. This contribution is crucial for comprehending the diverse impacts of organized crime on the economy and emphasizes the significance of tackling these challenges to promote development.

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