# kaal:claim:1806252-014

**Claim.** 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.

**Type.** failure  **Support.** argued

**Source quote.**

> 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.

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

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

**Verify.** sha256 of source PDF `3343ebfe05a925c3d1a75625c4b351ccff515c50819a48d155804daacf01429d` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202011%20-%20Hedge%20Fund%20Regulation%20Via%20Basel%20III.pdf

**Failure mode.** ccrm-free-riding  (family: other)

**Topics.** risk-and-incentives, systemic-risk, economics

**Keywords.** free-riding, public-goods, counterparty-credit-risk, systemic-risk, market-failure

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.