Assessing the effects of anti-mafia police actions on lending

The Financial Times reports on a European Central Bank study that shows:

Between 2018 and 2021, nearly 700 Mafia-linked firms across Italy were dismantled. An ECB study into the impact of this crackdown — conducted alongside a team of academics from the Frankfurt School of Finance & Management, University of Padua and Seattle University — shows that dismantling Mafia-controlled companies can boost productivity in affected areas.

By linking police actions to local credit flows, the study focuses on the ripple effects in nearby businesses without direct criminal ties. The results are striking. Where Mafia firms were shut down, lending to legitimate businesses rose by between 0.8 per cent and 2.1 per cent, compared with areas untouched by police action. In total, we estimate that up to €3.6bn in new credit flowed to local companies now able to expand and compete on a level playing field.