Reuters – Hedge funds, not banks, may be the most important transmitters of shocks during financial crises, according a study published Monday by the Federal Reserve Bank of San Francisco.
The finding suggests that hedge funds may be a bigger conduit for systemic risk to financial markets than previously thought, and may have been central in generating risk during the 2007-2009 crisis, Goethe University professor Reint Gropp wrote in the latest edition of the regional bank’s Economic Letter.
