# kaal:claim:2470008-006

**Claim.** Hedge funds threaten the financial system through two distinct channels: directly, by damaging systemically important financial institutions, and indirectly, by generating liquidity shocks and raising volatility in key markets.

**Type.** mechanism  **Support.** argued

**Holds when.**

- hedge funds active in key markets
- counterparty relationships with systemically important institutions

**Source quote.**

> In addition to posing a direct systemic risk by damaging systemically important financial institutions, hedge funds can also pose an indirect threat to the financial system by generating a liquidity shock and increasing market volatility in key markets.

**From.** Wulf A. Kaal, *The Systemic Risk of Private Funds after the Dodd-Frank Act* (2014), II. Systemic Risk of Private Funds

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

**Verify.** sha256 of source PDF `5f68a401c935527d89658171e9b48a4d186710459aaf2bdbead755507394e8c9` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202014%20-%20The%20Systemic%20Risk%20of%20Private%20Funds%20after%20the%20Dodd-Frank%20Act.pdf

**Topics.** private-funds, defi, systemic-risk, risk-and-incentives, economics

**Keywords.** hedge-funds, liquidity, contagion, systemic-risk, market-volatility

**Superseded by.** A later claim revises this one. Prefer quoting: https://wulfkaal.github.io/claims/2748096-016

**Related claims.**

- contested_by: https://wulfkaal.github.io/claims/2748096-006
- supported_by: https://wulfkaal.github.io/claims/2748096-002

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