kaal:claim:2714974-029

Any prescriptive regulatory regime for hedge funds risks leaving the financial system less stable rather than more stable, because counterparties relax vigilance when they believe authorities are monitoring and constraining fund risk taking.

Source quote, verbatim

A risk of any prescriptive regulatory regime is that, by creating moral hazard in the marketplace, it leaves the system less rather than more stable.

From

Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016), INDIRECT HEDGE FUND REGULATION, p. 26
https://ssrn.com/abstract=2714974 · source PDF

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

Holds when

applies to prescriptive position reporting and monitoring regimes

Classification

failuresupport: arguedfailure: Prescriptive regime destabilizationfamily: moral-hazard-and-bailout-expectationrisk-and-incentivescompliance

Verify

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Attestation record: colloquium/attestations/6d3a6a65957c9bea...json
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