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

Alfano, Maria Rosaria and Cantabene, Claudia and de Iudicibus, Alessandro (2024): The effectiveness of a certification of legality. Evidence from Italian firms.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: White List, Organized crime, Certification, Reputation, DID
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; H - Public Economics > H4 - Publicly Provided Goods > H40 - General; H - Public Economics > H8 - Miscellaneous Issues > H81 - Governmental Loans ; Loan Guarantees ; Credits ; Grants ; Bailouts; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R38 - Government Policy

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