kaal:claim:2748096-020

The systemic risk of hedge fund leverage comes from its capacity to amplify liquidity losses and to contribute to asset overvaluation during bull markets, not from leverage as such.

Systemic risks associated with hedge funds' use of leverage stems from its ability to amplify liquidity losses and contribute to the overvaluation of assets during bull markets.

Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016), Leverage, p. 8
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

mechanismsupport: argueddefieconomicssystemic-riskrisk-and-incentives

• supersedes kaal:claim:2470008-005 The systemic risk of hedge funds arises principally from the combination of aggressive investment strategies a...

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