How Banks Turned Into Giant Synthetic Hedge Funds
Odd Lots
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Banks as Synthetic Hedge Funds
This chapter explores the evolving relationship between banks and private equity fund managers, focusing on credit lines that allow fund managers to delay capital calls. It highlights the motivations of banks to generate higher returns by adopting hedge fund-like strategies, illustrated by the case study of Silicon Valley Bank. The discussion underscores the need for regulatory adaptations to effectively manage the risks associated with banks operating in this synthetic hedge fund manner.
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