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The leverage of hedge funds

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  • Titman, Sheridan

Abstract

Long-short hedge funds are often very highly levered, despite the costs of leverage that became apparent during the LTCM crisis in 1998 and the more recent episode in 2008. This note explores potential market imperfections that may explain the use of leverage.

Suggested Citation

  • Titman, Sheridan, 2010. "The leverage of hedge funds," Finance Research Letters, Elsevier, vol. 7(1), pages 2-7, March.
    • Handle: RePEc:eee:finlet:v:7:y:2010:i:1:p:2-7
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    References listed on IDEAS

    as
    1. Gromb, Denis & Vayanos, Dimitri, 2002. "Equilibrium and welfare in markets with financially constrained arbitrageurs," Journal of Financial Economics, Elsevier, vol. 66(2-3), pages 361-407.
    2. Green, Richard C., 1984. "Investment incentives, debt, and warrants," Journal of Financial Economics, Elsevier, vol. 13(1), pages 115-136, March.
    3. Gromb, Denis & Vayanos, Dimitri, 2003. "Corrigendum to "Equilibrium and welfare in markets with financially constrained arbitrageurs" [J. Financial Economics 66 (2002) 361]," Journal of Financial Economics, Elsevier, vol. 67(3), pages 531-531, March.
    4. Choi, Darwin & Getmansky, Mila & Tookes, Heather, 2009. "Convertible bond arbitrage, liquidity externalities, and stock prices," Journal of Financial Economics, Elsevier, vol. 91(2), pages 227-251, February.
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    Cited by:

    1. Yang CAO & Joseph P. OGDEN & Cristian I. TIU, 2011. "Who Benefits From Funds Of Hedge Funds? A Critique Of Alternative Organizational Structures In The Hedge Fund Industry (I)," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 1(1), pages 19-36, December.

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