kaal:claim:3405660-012

Banks continue to find hedge fund business desirable because hedge funds take risks other participants will not, borrow heavily and pay a premium for borrowing, which sustains the lending relationship despite its dangers.

Hedge funds are significant clients and counterparties to banks, particularly because they take on risks that other financial participants would not, borrow massive amounts and are willing to pay a premium for borrowing. Therefore, banks management still view business from hedge funds as desirable.

Kaal, Indirect Regulation of Hedge Funds (2019), II.1 Industry Practices, p. 10
https://ssrn.com/abstract=3405660 · source PDF

Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660

mechanismsupport: arguedsystemic-riskdefiprivate-fundsrisk-and-incentiveseconomics

• supports kaal:claim:1806252-002 Because hedge funds play a large role in the credit derivatives market and that market recently failed, an inc...

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