Hedge funds' risk management practices are typically evolved enough to constitute a major barrier to systemic shocks, and their trading counterparties and lenders further help prevent losses large enough to disrupt the financial system.
Source quote, verbatim
Hedge funds' risk management practices are typically so evolved that they constitute a major barrier to systemic shocks. Hedge funds' counterparties in trades and lenders to hedge funds can also help prevent large losses that could disrupt the financial system.
From
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
Cite as
Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096
Holds when
assumes counterparties and lenders actively monitor fund exposures
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