What the mafia can tell us about microfinance

The folks over at the India Development Blog have a very interesting post that points out that the Italian mafia has been flourishing during this financial crisis. According to Alastair:

The report comes from Naples, a bustling southern Italian city that sits below the famous and picturesque Mt. Vesuvius – infamous for the people in Pompeii. Of late, the southern mafia (camorra) have never had it so good. Due to the credit drought in Europe, the Italian mafia’s lending activities have earned them an estimated $200 billion profit this last year – 6% of the country’s GDP.

Not too shabby - at least for the mafia. But the bigger concern is that the financial crisis might be pushing microentrpreneurs and others who would normally borrow from microfinance institutions to more traditional money lenders:

In India the financial downturn and the recent attacks in Mumbai are likely to limit credit further. If the events in Naples are anything to go by, small MFIs may have a tough time and the more informal moneylending institutions might see their business pick up.