Bank loans an offer Italy's criminals can refuse

Italy's underground economy does hold back financial deepening, research published by the Bank of Italy finds.

By using panel data on local credit markets in Italy, the research estimates that a shift of 1% of employees from regular to irregular work leads to a decline of between one and two percentage points in GDP in the volume of business lending and of 0.3 percentage points in outstanding credit to households.

But the feedback effects of financial deepening on the size of the informal sector

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