IDEAS home Printed from https://ideas.repec.org/p/chf/rpseri/rp1568.html
   My bibliography  Save this paper

Financial Conglomerate Affiliation and Hedge Funds’ Countercyclical Risk Taking

Author

Listed:
  • Francesco A. Franzoni

    (University of Lugano; Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute)

  • Mariassunta Giannetti

    (Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance)

Abstract

We show that financial-conglomerate-affiliated hedge funds (FCAHFs) have more stable funding and lower flow-performance sensitivity than other funds even though they are less likely to impose impediments on withdrawals. Arguably due to their privileged access to funding, during periods of financial turmoil, FCAHFs are able to take more risk and to purchase less liquid and more volatile stocks than other hedge funds. During good times, instead, FCAHFs expand their assets less than other funds and are less exposed to systematic risk factors. Thus, FCAHFs appear to perform a stabilizing function for the financial system.

Suggested Citation

  • Francesco A. Franzoni & Mariassunta Giannetti, 2015. "Financial Conglomerate Affiliation and Hedge Funds’ Countercyclical Risk Taking," Swiss Finance Institute Research Paper Series 15-68, Swiss Finance Institute, revised May 2016.
    • Handle: RePEc:chf:rpseri:rp1568
    as

    Download full text from publisher

    File URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2709565
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Hedge Funds; Financial Conglomerates; Volker Rule; Liquidity Provision;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chf:rpseri:rp1568. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ridima Mittal (email available below). General contact details of provider: https://edirc.repec.org/data/fameech.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.