kaal:claim:1806252-014

Systemic risk and financial market stability are public goods, so individual banks free ride on other banks' hedge fund credit risk management and are not incentivized to adequately monitor or limit their own hedge fund risk exposure.

Systemic risk and financial market stability generate public good and free-rider problems: banks are not incentivized to adequately monitor or limit hedge fund risk exposure because of their reliance on hedge fund credit risk management by other banks.

Kaal, Hedge Fund Regulation Via Basel III (2011), V.2 Systemic Risk and Externalities, p. 64
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

failuresupport: arguedfailure: ccrm-free-ridingfamily: otherrisk-and-incentivessystemic-riskeconomics

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