Even if the risks hedge funds pose to financial institutions are often overstated, liquidity risk remains a serious issue because of the critical linkages created by over-the-counter credit risk relations.
Source quote, verbatim
While the risks to financial institutions are often overstated, liquidity risk remains a serious issue due to the critical linkages created by over-the-counter credit risk relations.
From
Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016), Hedge Funds' Contributions to the Financial Crisis of 2007-2008, p. 7 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
applies where hedge fund exposures run through over-the-counter credit relationships
Classification
mechanismsupport: argueddefirisk-and-incentives
Related claims
supersedeskaal:claim:2470008-006 Hedge funds threaten the financial system through two distinct channels: directly, by damaging systemically im...
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