Shocker! Hedge funds did not cause the financial crisis

That's the conclusion of a new monograph — “Hedge Funds and Systemic Risk”— from RAND Corp., a non-profit research and policy organization. The report's authors analyzed the extent to which hedge funds create or contribute to systemic risk. In the the context of the 2008 global market crash, their conclusion was that hedge funds did not play as significant a role in the crisis as credit-rating agencies, mortgage lenders and credit default swaps issuers.

“We found little evidence that hedge funds contributed to the housing bubble” or that their short selling of financial stocks was “a major contributing factor,” said Lloyd Dixon, lead author of the study and a RAND senior economist,…

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