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Bd. 2021 Nr. 1: Krise

Alternative Investment Funds as Potential Catalysts in the Realization of Systemic Risk in Financial Markets: Thesis summary

March 19, 2021


This thesis attempts to describe the regulatory environment and current challenges for
collective asset management within the European Union. The focus is on alternative investments
under the AIFMD, but also extends to collective investment schemes governed by UCITS. The initial
focus of this thesis is on the concept of systemic risk itself and to what extent collective
investment schemes and alternative investment funds might be catalysts for systemic risk. In addition,
since financing activity in Europe is still primarily reliant on banks, and the European asset
management industry has enormous potential to enable direct investments by retail and professional
investors in financial markets, the thesis also examines what would need to be done to unlock this
potential. Furthermore, the rapidly changing environment for banking in light of technological
advances and financial innovation might lead, in the long-term, to the replacement of traditional banks
by asset managers and similar financial conduits. The thesis therefore also attempts to contrast the
current state of regulation in the European Union with potential policy recommendations that could
lead to a more efficient, systemically stable, and innovation-friendly regulatory framework.