Can the Hedge Funds regulation limit the negative impact of a systemic crisis?

Abstract

The present liquidity crisis has been exacerbated due to the extensive use of financial instruments with limited underlying quality and fragil rating. Hedge Funds with concentrated or diversified strategies around such structured financial products have been the first to see the valuation of their portfolio rapidly deteriorating. In the present paper we analyze the implications that Hedge Fund regulation can have as possible mitigation strategy of a systemic crisis.