# kaal:claim:2748096-038

**Claim.** Hedge funds now supply funding to the banking system that may be rapidly withdrawn during a liquidity crisis and supply a substantial share of the sellers' side of the credit default swap market, thereby assuming risks traditionally held by investment banks and insurance companies.

**Type.** mechanism  **Support.** argued

**Holds when.**

- applies to hedge funds operating within the shadow banking system

**Source quote.**

> He highlights the risk that hedge funds are providing funding to the banking system, which may be rapidly withdrawn during a liquidity crisis.

**From.** Wulf A. Kaal, Timothy A. Krause, *Hedge Funds and Systemic Risk* (2016), POST-CRISIS EVIDENCE ON THE SYSTEMIC RISK OF HEDGE FUNDS, page 19

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

**Verify.** sha256 of source PDF `8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Krause%20-%202016%20-%20Hedge%20Funds%20and%20Systemic%20Risk.pdf

**Topics.** systemic-risk

**Keywords.** shadow-banking, credit-default-swaps, bank-funding, regulatory-oversight

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