# Margin calls

`kaal:entity:margin-calls`

**Status.** derived

This node is assembled mechanically from the 3 claims that carry the concept tag `margin-calls`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

3 claims across 2 works, 2016 to 2017.

**2016**

- [2748096-021](https://wulfkaal.github.io/claims/2748096-021) [failure/argued] *(failure mode)* -- 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.
  > If hedge funds simultaneously liquidate positions and reduce leverage, leverage can also increase the risk of a fire-sale externality that increases systemic risk.
  Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096
- [2748096-031](https://wulfkaal.github.io/claims/2748096-031) [empirical/evidenced] -- 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.
  > 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
  Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096

**2017**

- [2998097-003](https://wulfkaal.github.io/claims/2998097-003) [mechanism/argued] *(failure mode)* -- 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.
  > 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.
  Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/margin-calls.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.