The mafia extended its protection skills to raising capital for illicit trades

Evidence

Mafiosi came to the rescue. Exploiting their ability as guarantors, they raised capital from their families, other mafiosi, their customers, and fellow villagers who knew only that they were dealing with men of respect. … When Mariano Marsala complained that he and the members of his family were not making enough money in Vicari and sought financial advice from bigger mafiosi, he was invited to invest in the tobacco business at 40 percent interest every three months in partnership with the families governing the trade in Palermo; Marsala invested 5 million lire (VM: 28-29). — Diego Gambetta, The Sicilian Mafia The Business of…, 620

Categorization

• XREF: Direct evidence for the reader’s Gambetta model: the mafia’s credibility as guarantor is the asset that substitutes for formal finance in a state-failed market. Contrast with Milgrom et al.’s Champagne Fairs, where private judges provide the analogous trust infrastructure.