kaal:claim:2470008-005

The systemic risk of hedge funds arises principally from the combination of aggressive investment strategies and high leverage with adverse price movements that can dry up credit and depress the market price of collateral.

A later claim in the corpus revises this one. Prefer quoting kaal:claim:2748096-020, kaal:claim:2748096-039.

Source quote, verbatim

Hedge funds' systemic risk is mainly the result of their pursuit of aggressive investment strategies and a significant level of leverage in combination with adverse fluctuations in market prices that can dry up credit and negatively affect the market price of collateral.

From

Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014), II. Systemic Risk of Private Funds
https://ssrn.com/abstract=2470008 · source PDF

Cite as

Wulf A. Kaal, The Systemic Risk of Private Funds after the Dodd-Frank Act (2014). SSRN: https://ssrn.com/abstract=2470008

Holds when

hedge funds employing leverage
periods of adverse market price fluctuations

Classification

mechanismsupport: arguedprivate-fundssystemic-riskrisk-and-incentiveseconomics

Related claims

extended_by kaal:claim:2748096-008 Market events like the LTCM failure can escalate into global financial crises when many highly leveraged hedge...
extended_by kaal:claim:3405660-033 The Basel Framework reduces systemic risk by regulating bank credit standards, which indirectly constrains hed...
supported_by kaal:claim:2748096-002 Despite conflicting government reports, the weight of post-crisis evidence from leading financial economists s...

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Attestation record: colloquium/attestations/8620c5ae3d939369...json
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