{
 "@context": "https://schema.org",
 "@type": "DefinedTerm",
 "@id": "https://wulfkaal.github.io/entities/credit-risk",
 "identifier": "kaal:entity:credit-risk",
 "name": "Credit risk",
 "termCode": "credit-risk",
 "inDefinedTermSet": {
  "@id": "https://wulfkaal.github.io/entities/index.json"
 },
 "author": {
  "@type": "Person",
  "name": "Wulf A. Kaal",
  "identifier": "https://orcid.org/0000-0003-0757-275X"
 },
 "dateModified": "2026-07-29",
 "canonicalForm": "https://wulfkaal.github.io/entities/credit-risk.md",
 "sha256": "6e8146a04c9d0d62a4c1fb635244ac04a6f982c54bca52de4d80b3d1065e4a93",
 "additionalProperty": [
  {
   "@type": "PropertyValue",
   "name": "status",
   "value": "derived"
  },
  {
   "@type": "PropertyValue",
   "name": "claim_count",
   "value": 6
  },
  {
   "@type": "PropertyValue",
   "name": "work_count",
   "value": 5
  },
  {
   "@type": "PropertyValue",
   "name": "year_span",
   "value": [
    "2016",
    "2021"
   ]
  },
  {
   "@type": "PropertyValue",
   "name": "non_current_claims",
   "value": 0
  }
 ],
 "subjectOf": [
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2748096-016",
   "identifier": "kaal:claim:2748096-016",
   "text": "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.",
   "abstract": "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.",
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "datePublished": "2016",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "applies where hedge fund exposures run through over-the-counter credit relationships"
   ],
   "source_pdf_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2811729-009",
   "identifier": "kaal:claim:2811729-009",
   "text": "Average unconstrained mutual fund performance over the three years preceding the study was lower than the return on the ten-year Treasury, and poor performance was often accompanied by high fees and increased credit risk.",
   "abstract": "On average, UMF performance has disappointed over the last three years, with returns lower than the return on the ten-year Treasury.43 Often, poor UMF performance has been accompanied by high fees and increased credit risk.",
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729",
   "datePublished": "2016",
   "claim_type": "empirical",
   "confidence": "evidenced",
   "is_failure_mode": true,
   "scope_conditions": [
    "three-year period preceding the study"
   ],
   "source_pdf_sha256": "0877b0a076f2614559cb0b1a736f73401cecbee7cfe014da6e36709208e92a74",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3405660-010",
   "identifier": "kaal:claim:3405660-010",
   "text": "Hedge fund disclosure to counterparties and investors relies on balance sheet concepts that are uninformative about the actual nature of market risk and credit risk exposures.",
   "abstract": "Disclosure by hedge funds to counterparties and investors are often made by using balance-sheet concepts, which are not informative about the nature of the exposures to market risk and credit risk.",
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "datePublished": "2019",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [],
   "source_pdf_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3405660-036",
   "identifier": "kaal:claim:3405660-036",
   "text": "The internal ratings based approach reduces information asymmetry because internal ratings capture supplementary borrower information that external credit assessors cannot reach and cover a broader range of borrowers.",
   "abstract": "internal ratings may incorporate supplementary information about borrowers that is usually beyond the reach of institutions providing external credit assessments, and may cover a much broader range of borrowers",
   "citation": "Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660",
   "datePublished": "2019",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "banks use the internal ratings based approach"
   ],
   "source_pdf_sha256": "cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3411110-003",
   "identifier": "kaal:claim:3411110-003",
   "text": "Blockchain reduces counterparty credit risk through a specific mechanism: a single shared ledger compresses the settlement cycle so that cash or securities are verifiably in the account within seconds of the trade, leaving almost no window for counterparty default.",
   "abstract": "credit risk is reduced because cash (if selling) or the securities (if purchasing) are in the account for verification shortly after the trade (which could be seconds, if not fractions of a second), because the settlement cycle is substantially reduced.",
   "citation": "Wulf A. Kaal, Samuel Evans, Blockchain-Based Securities Offerings (2019). SSRN: https://ssrn.com/abstract=3411110",
   "datePublished": "2019",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "a single shared ledger used across trading firms",
    "near instantaneous settlement"
   ],
   "source_pdf_sha256": "c7626eeb7642045b79f8745df1f7232a8fe8bc44a1f7e87b592850e35b392b50",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3936876-034",
   "identifier": "kaal:claim:3936876-034",
   "text": "Credit risk is low in digital asset transactions because the transactions are made instantaneously, which removes the counterparty performance window that generates credit risk in traditional custody.",
   "abstract": "Fortunately, this risk is low in digital asset transactions because transactions are made instantaneously.",
   "citation": "Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876",
   "datePublished": "2021",
   "claim_type": "mechanism",
   "confidence": "asserted",
   "is_failure_mode": false,
   "scope_conditions": [
    "on chain digital asset transactions"
   ],
   "source_pdf_sha256": "9bc0903d01910460298e754c451f027df4324367359800a98ee8e638d94aff55",
   "status": "current"
  }
 ],
 "description": "6 claims in the published works of Wulf A. Kaal carry the concept tag 'credit-risk'. Derived node: a roster, not an adjudicated definition."
}