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Hedge funds : la fin du laissez-faire

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  • Michel Aglietta
  • Sandra Rigot

Abstract

Hedge fund performance has collapsed while the financial crisis has been worsening. Indeed, hedge funds are part of the shadow banking system that is at the heart of the crisis. They embody all the weaknesses that have engineered the mess: excess leverage, opaque activities, illusory alpha, perverse incentives. Hedge fund regulation is long overdue. But it must be part of a comprehensive overhaul of market finance. Overseeing the recommendations of professional organisations, regulatory authorities and international institutions against our risk analysis, we emphasize two principles of future regulatory reforms: reinforcing indirect regulation to limit excessive leverage of hedge funds and enhancing market discipline in order to reduce information asymmetries and discard perverse incentives relative to the fees structure of hedge funds managers. Classification JEL : G23

Suggested Citation

  • Michel Aglietta & Sandra Rigot, 2009. "Hedge funds : la fin du laissez-faire," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 693-702.
    • Handle: RePEc:cai:recosp:reco_603_0693
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    Cited by:

    1. Quôc Thai Huynh, 2019. "Determinants of hedge fund activism: development of a model of ex-ante decision-making for corporate stake [Les déterminants de l'activisme des hedge funds : élaboration d'un modèle de décision ex-," Working Papers hal-02145379, HAL.

    More about this item

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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