Hedge Funds and the Financial Crisis

Mercatus on Policy, No. 24, Jan. 2009

NYLS Legal Studies Research Paper No. 09/10 #31

5 Pages Posted: 6 Mar 2010  

Houman B. Shadab

New York Law School

Date Written: January 2009

Abstract

The performance of hedge funds during the financial crisis suggests that wide-ranging financial regulation is not always necessary to advance investor protection and financial stability. While 2008 was a year of record hedge fund losses and investor withdrawals that came about in part because many hedge fund managers failed to adequately respond to the financial crisis, the hedge fund industry significantly outperformed the heavily regulated mutual fund sector and, unlike the banking industry, was never in jeopardy of collapsing. Hedge funds did not cause or meaningfully exacerbate the financial crisis and in fact have reduced its impact and are helping the economy to recover.

Keywords: hedge funds, financial crisis, systemic risk

Suggested Citation

Shadab, Houman B., Hedge Funds and the Financial Crisis (January 2009). Mercatus on Policy, No. 24, Jan. 2009; NYLS Legal Studies Research Paper No. 09/10 #31. Available at SSRN: https://ssrn.com/abstract=1564847

Houman B. Shadab (Contact Author)

New York Law School ( email )

185 W. Broadway
New York, NY 10013
United States

HOME PAGE: http://www.nyls.edu/faculty/faculty_profiles/houman_shadab

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