# kaal:claim:2714974-026

**Claim.** Direct regulation of hedge fund leverage collapses on the details because balance sheet leverage is not an adequate measure of risk and would push funds into off-balance sheet avoidance strategies.

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

**Holds when.**

- applies to proposals for direct leverage regulation

**Source quote.**

> Balance sheet leverage is not an adequate measure of risk and would encourage avoidance behavior with off-balance sheet strategies.

**From.** Kaal and Oesterle, *The History of Hedge Fund Regulation in the United States* (2016), INDIRECT HEDGE FUND REGULATION, page 24

**Cite as.** Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974

**Verify.** sha256 of source PDF `7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Oesterle%20-%202016%20-%20The%20History%20of%20Hedge%20Fund%20Regulation%20in%20the%20United%20States.pdf

**Failure mode.** Balance sheet leverage mismeasurement  (family: measurement-and-metric-failure)

**Topics.** regulatory-failure, research-methods, risk-and-incentives

**Keywords.** leverage, regulatory-arbitrage, risk-measurement, off-balance-sheet

**Related claims.**

- extended_by: https://wulfkaal.github.io/claims/3405660-024
- supported_by: https://wulfkaal.github.io/claims/3405660-010

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