kaal:claim:2748096-012

The contagion story, in which hedge fund losses spread to other financial institutions and undermine systemic stability, is counterbalanced in practice because hedge fund collapses are rarely sudden and almost always unfold in incremental steps over a long period.

First, hedge fund collapses are rarely sudden but in practice almost always occur in incremental steps over a long time period.

Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016), Hedge Funds' Contributions to the Financial Crisis of 2007-2008, p. 6
https://ssrn.com/abstract=2748096 · source PDF

Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096

• describes observed hedge fund collapse dynamics rather than theoretical models

failuresupport: arguedfailure: gradual collapse defeats contagion channelfamily: systemic-risk-transmissionsystemic-riskrisk-and-incentives

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