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 "@type": "DefinedTerm",
 "@id": "https://wulfkaal.github.io/entities/margin-calls",
 "identifier": "kaal:entity:margin-calls",
 "name": "Margin calls",
 "termCode": "margin-calls",
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 "author": {
  "@type": "Person",
  "name": "Wulf A. Kaal",
  "identifier": "https://orcid.org/0000-0003-0757-275X"
 },
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 "subjectOf": [
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2748096-021",
   "identifier": "kaal:claim:2748096-021",
   "text": "When hedge funds simultaneously liquidate positions and reduce leverage, leverage generates a fire-sale externality that raises systemic risk, arising when a fund must sell assets it regards as drastically undervalued in order to meet margin calls or redemption requests.",
   "abstract": "If hedge funds simultaneously liquidate positions and reduce leverage, leverage can also increase the risk of a fire-sale externality that increases systemic risk.",
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "datePublished": "2016",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "simultaneous deleveraging across funds",
    "binding margin calls or redemption requests"
   ],
   "source_pdf_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2748096-031",
   "identifier": "kaal:claim:2748096-031",
   "text": "Hedge fund redemptions and margin calls, both liquidity reducing events, were the primary drivers of asset selloffs during the financial crisis of 2007-2008, and hedge fund investors are three times more likely than mutual fund investors to withdraw capital during market downturns.",
   "abstract": "hedge fund redemptions and margin calls, which are liquidity reducing events, were the primary drivers of selloffs during the financial crisis of 2007-2008. They demonstrate that hedge fund investors are three times more likely to withdraw capital during market downturns",
   "citation": "Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096",
   "datePublished": "2016",
   "claim_type": "empirical",
   "confidence": "evidenced",
   "is_failure_mode": false,
   "scope_conditions": [
    "financial crisis of 2007-2008",
    "comparison group is mutual fund investors"
   ],
   "source_pdf_sha256": "8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2998097-003",
   "identifier": "kaal:claim:2998097-003",
   "text": "Because banks and brokers had let LTCM borrow the full value of its collateral, LTCM's 4.8 billion dollars in capital dissipated quickly once banks began making margin calls.",
   "abstract": "Because banks and brokers had allowed LTCM to borrow 100 percent of the value of its collateral prior to the worsening of LTCM's financial condition in 1998, LTCM's $4.8 billion in capital dissipated quickly when the banks began to make margin calls.",
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "datePublished": "2017",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "LTCM, 1998",
    "100 percent collateral lending by banks and brokers"
   ],
   "source_pdf_sha256": "0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5",
   "status": "current"
  }
 ],
 "description": "3 claims in the published works of Wulf A. Kaal carry the concept tag 'margin-calls'. Derived node: a roster, not an adjudicated definition."
}