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This chapter discusses how to apply the look-through, as required under various financial regulations for an Internal Model-based risk measurement approach, to private equity funds. Several ways to implement a look-through have been proposed, but the regulatory requirements are conceptually and practically difficult to meet. This, in combination with a persistently benevolent environment for private equity investing, may have even eroded incentives for financial institutions to build more sophisticated risk-management systems for their allocations to private equity.
Introduction
This chapter discusses how to apply the look-through, as required under various financial regulations for an Internal Model-based risk measurement approach (see BIS 2022), to private equity funds. According to BIS (2020), the look-through is the most granular and thus assumed the most risk-sensitive approach. It requires a bank to risk weight the fund’s...
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References
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Meyer, T. (2024). Look-Through. In: Cumming, D., Hammer, B. (eds) The Palgrave Encyclopedia of Private Equity. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-38738-9_138-1
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DOI: https://doi.org/10.1007/978-3-030-38738-9_138-1
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