But it is clear that infiltration does not just happen. There must be a reason why a company goes to the mafia and asks for help. And one new paper from the Bank of Italy and the University of Milan shows what can be a catalyst for mafia infiltration.
If you have the image that Don Corleone is doing someone in financial need a favor by giving them a loan, then you are right on the money. One of the main ways a company becomes involved with the mafia is because it is in financial distress.
The chart below shows the availability of bank loans to companies that are classified as junk in the five years before and after the downgrade. As you can see, the availability of bank loans drops by 10% in the year after the downgrade and then remains low for years. Cumulatively over five years, the availability of bank loans falls by 30%.
The likelihood that you can get a bank loan after downgrading to junk
Source: Daniele et al. (2025)
This is the old saying that a bank is a company that lends you an umbrella when the sun is shining, and then asks you to give it back as soon as it starts to rain. Companies that are relegated to junk need financing, and suddenly banks won’t provide that financing anymore.
So the CEO and CFO go to the local godfather and ask for a favor. This is what happens to the likelihood that a company will be infiltrated by the mafia after a downgrade. It increases by about 5%.
The chance to be infiltrated by the mafia after a downgrade to junk
Source: Daniele et al. (2025)
#loan #offer #refuse