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Author: Lloyd S. Dixon Publisher: Rand Corporation ISBN: 0833080857 Category : Hedge funds Languages : en Pages : 23
Book Description
These proceedings summarize the key themes and issues raised during a September 2012 RAND symposium. Discussion focused on how hedge funds might contribute to systemic risk and the extent to which recent financial reforms address these risks.
Author: Lloyd S. Dixon Publisher: Rand Corporation ISBN: 0833080857 Category : Hedge funds Languages : en Pages : 23
Book Description
These proceedings summarize the key themes and issues raised during a September 2012 RAND symposium. Discussion focused on how hedge funds might contribute to systemic risk and the extent to which recent financial reforms address these risks.
Author: Dennis Sauert Publisher: GRIN Verlag ISBN: 3656676895 Category : Business & Economics Languages : en Pages : 105
Book Description
Master's Thesis from the year 2011 in the subject Economics - Finance, grade: 2,0, Berlin School of Economics and Law, language: English, abstract: Over the past decades the architecture of the financial system has undergone a significant change, whereby the alternative investment industry has claimed an ever increasing importance and popularity. Hedge funds have taken the leading role in this development. From a handful of hedge fund managers in the United States (U.S.), hedge funds have been growing to a worldwide business at the forefront of sophisticated financial innovation. Despite their rising success in the alternative investment industry, only a few subjects in the financial world appear to create such diverse opinions as hedge funds do. On the one hand, there are policy makers and academics, which appreciate and highlight hedge funds’ main role in increasing profits and effectively diversifying risks in traditional portfolios. Moreover, Alan Greenspan, the former chairman of the Federal Reserve System (Fed), stated that hedge funds “have become major contributors to the flexibility of the financial system.” Provided with flexibility and light regulatory oversight, their participation in various markets has been proven important. Especially, due to the provision of liquidity, financial markets have become more efficient but also resilient by absorbing many financial shocks in past years, including the most recent financial crisis. On the other hand, there are also policy makers and academics, who claim that hedge funds are large enough to destabilize markets or even trigger financial crises. A common concern following the near failure of Long Term Capital Management (LTCM) in 1998 is that one single hedge fund, as a highly leveraged investment pool, can create systemic risk to the worldwide financial system. Such ongoing concern about the vulnerability paired with the tremendous development and opaque nature of hedge funds, emphasize their potential threat to financial stability. Despite the fact that only little is known about these loosely regulated private investment pools, an unstudied reaction to 1998 is to regulate them. Against this background, the aim of this paper is to give the reader a better oversight and understanding of the hedge fund industry by deeply analyzing and discussing their beneficial characteristics but more importantly the issue of how they may be an essential threat to the financial system. Therefore, the paper is split into four main parts. The first part provides the reader with an overall picture of the unfolding of the hedge fund industry from the beginnings...
Author: John Kambhu Publisher: DIANE Publishing ISBN: 1428988769 Category : Business & Economics Languages : en Pages : 214
Book Description
Hedge funds have become important players in the U.S. & global capital markets. These largely unregulated funds use: a variety of complex trading strategies & instruments, in their liberal use of leverage, in their opacity to outsiders, & in their convex compensation structure. These differences can exacerbate market failures associated with agency problems, externalities, & moral hazard. Counterparty credit risk mgmt. (CCRM) practices are the first line of defense against market disruptions with potential systemic consequences. This article examines how the unique nature of hedge funds may generate market failures that make CCRM for exposures to the funds intrinsically more difficult to manage, both for regulated institutions & for policymakers. Ill.
Author: United States. Congress. House. Committee on Financial Services Publisher: Government Printing Office ISBN: Category : Electronic government information Languages : en Pages : 144
Author: Wulf A. Kaal Publisher: ISBN: Category : Languages : en Pages : 26
Book Description
The public media and politicians regularly debate the potential for hedge funds to contribute to systemic risk in financial markets. Because the hedge fund industry experienced substantial growth over the past two decades, concerns about hedge funds' systemic risk have increased and regulators have taken measures to mitigate possible risks associated with these funds. The chapter summarizes the pre- and post-crisis debate and highlights the post-crisis evidence regarding hedge funds' alleged systemic risk. In particular, the authors examine evidence regarding specific factors surrounding hedge funds' possible contributions to systemic risk, including risk management incentives, leverage, liquidity characteristics, regulation, financial stability, transparency, and their potential to induce and perpetuate market contagion.
Author: Lloyd Dixon Publisher: RAND Corporation ISBN: 9780833076847 Category : Business & Economics Languages : en Pages : 0
Book Description
This report explores the extent to which hedge funds create or contribute to systemic risk, the role they played in the financial crisis, and whether and how the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 addresses the potential systemic risks posed by hedge funds.
Author: Lloyd S. Dixon Publisher: ISBN: 9780833080837 Category : Financial crises Languages : en Pages : 11
Book Description
These proceedings summarize the key themes and issues raised during a symposium on September 24, 2012, hosted by the RAND Center for Corporate Ethics and Governance. Discussion focused on the ways in which hedge funds might contribute to systemic risk and the extent to which recent financial reforms address these potential risks. Participants included thought leaders from industry, government, and academia. Regulatory perspectives were represented by senior staff from the U.S. Department of the Treasury, the Federal Reserve Board of Governors, the Financial Crisis Inquiry Commission, and the House Financial Services Committee. Individuals involved in various aspects of the hedge-fund industry brought the private-sector perspective, and academics and RAND staff brought a policy analysis perspective.
Author: Nicholas Chan Publisher: ISBN: Category : Hedge funds Languages : en Pages : 0
Book Description
Systemic risk is commonly used to describe the possibility of a series of correlated defaults among financial institutions---typically banks---that occur over a short period of time, often caused by a single major event. However, since the collapse of Long Term Capital Management in 1998, it has become clear that hedge funds are also involved in systemic risk exposures. The hedge-fund industry has a symbiotic relationship with the banking sector, and many banks now operate proprietary trading units that are organized much like hedge funds. As a result, the risk exposures of the hedge-fund industry may have a material impact on the banking sector, resulting in new sources of systemic risks. In this paper, we attempt to quantify the potential impact of hedge funds on systemic risk by developing a number of new risk measures for hedge funds and applying them to individual and aggregate hedge-fund returns data. These measures include: illiquidity risk exposure, nonlinear factor models for hedge-fund and banking-sector indexes, logistic regression analysis of hedge-fund liquidation probabilities, and aggregate measures of volatility and distress based on regime-switching models. Our preliminary findings suggest that the hedge-fund industry may be heading into a challenging period of lower expected returns, and that systemic risk is currently on the rise.
Author: United States House of Representatives Publisher: ISBN: 9781658772198 Category : Languages : en Pages : 142
Book Description
Hedge funds and systemic risk in the financial markets: hearing before the Committee on Financial Services, U.S. House of Representatives, One Hundred Tenth Congress, first session, March 13, 2007.