Risk Targeting and Policy Illusions - Evidence from the Announcement of the Volcker Rule
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2466477 [papers.ssrn.com]
2016-11-28 08:29
However, the announcement of the rule did not reduce the banks’ overall risk-taking. To keep their risk targets, the affected banks raised the riskiness of their asset returns. We also find some evidence that the affected banks raised their trading risk and decreased the hedging of their banking business.
Good intentions and all that. Attempting to fix one variable causes others to drift even more.