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Evaluating risks-based communities of Mafia companies: a complex networks perspective

Author

Listed:
  • Nicola Giuseppe Castellano

    (University of Pisa)

  • Roy Cerqueti

    (Sapienza University of Rome
    London South Bank University)

  • Bruno Maria Franceschetti

    (University of Macerata)

Abstract

This paper presents a data-driven complex network approach, to show similarities and differences—in terms of financial risks—between the companies involved in organized crime businesses and those who are not. At this aim, we construct and explore two networks under the assumption that highly connected companies hold similar financial risk profiles of large entity. Companies risk profiles are captured by a statistically consistent overall risk indicator, which is obtained by suitably aggregating four financial risk ratios. The community structures of the networks are analyzed under a statistical perspective, by implementing a rank-size analysis and by investigating the features of their distributions through entropic comparisons. The theoretical model is empirically validated through a high quality dataset of Italian companies. Results highlights remarkable differences between the considered sets of companies, with a higher heterogeneity and a general higher risk profiles in companies traceable back to a crime organization environment.

Suggested Citation

  • Nicola Giuseppe Castellano & Roy Cerqueti & Bruno Maria Franceschetti, 2021. "Evaluating risks-based communities of Mafia companies: a complex networks perspective," Review of Quantitative Finance and Accounting, Springer, vol. 57(4), pages 1463-1486, November.
    • Handle: RePEc:kap:rqfnac:v:57:y:2021:i:4:d:10.1007_s11156-021-00984-3
    DOI: 10.1007/s11156-021-00984-3
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    More about this item

    Keywords

    Companies financial risk indicator; Organized crime; Complex networks; Clustering coefficient; Entropy; Rank-size analysis;
    All these keywords.

    JEL classification:

    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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