kaal:claim:3405660-034
Market discipline, internal ratings and supervisory review under the Basel Framework change bank lending practice and disclosure, which in turn lowers hedge fund leverage and mitigates moral hazard of the kind seen at LTCM.
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Moral hazard problems are addressed because the Basel Framework guarantees, by introducing market discipline, internal ratings and supervisory review, a change in lending practice and disclosure. This, in turn, will further decrease the capital – leverage ratio of hedge funds.
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mechanismsupport: arguedrisk-and-incentiveseconomicssystemic-risk
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