kaal:claim:1806252-011

Banks' lending practices and counterparty credit risk management can curtail hedge funds' excessive risk taking because banks can use the threat of cutting off future lending to change a fund's behavior.

counterparty credit risk management (CCRM) may allow them to curtail excessive risk taking, because they are in a position to use the threat of cutting off future lending to improve a hedge fund's behavior.

Kaal, Hedge Fund Regulation Via Basel III (2011), V. AN ALTERNATIVE APPROACH TO HEDGE FUND REGULATION, p. 62
https://ssrn.com/abstract=1806252 · source PDF

Kaal, Hedge Fund Regulation Via Basel III (2011). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1806252

• the bank has an ongoing lending relationship with the fund

mechanismsupport: arguedrisk-and-incentivessystemic-riskcompliance

• extended_by kaal:claim:2714974-031 Banks are uniquely positioned to discipline hedge fund behavior because their role as lenders, market makers, ...
• supported_by kaal:claim:2748096-007 Post-LTCM counterparty credit risk management, in which regulators pressed banks to monitor and limit the leve...
• extended_by kaal:claim:2714974-032 Indirect regulation through bank capital adequacy standards can reach systemic risk because those standards al...

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