Ben Bernanke, Douglas Diamond and Philip Dybvig Win Nobel Prize in Economics
(IntegrityPress.org) – Ben Bernanke is an economist who served as the chairman of the Federal Reserve from 2006 to 2014 and led the US monetary policy response to the financial crash of 2008. Bernanke and fellow economists Philip Dybvig and Douglas Diamond just won the Nobel Prize in Economics for work on preventing bank runs.
Financial Institutions work by accepting deposits from many savers for long-term wealth generation while simultaneously using the funds to sell interest-paying loans to borrowers. The system only works as long as a large percentage of deposit account holders don’t decide to withdraw their savings at once, a scenario known as a bank run.
Former Fed chairman Ben Bernanke has won the Nobel Prize in economics — along with economists Douglas Diamond and Philip Dybvig — for their research on bank runs and measures to prevent them.https://t.co/tokVsxF94F
— NPR (@NPR) October 10, 2022
The award-winners have worked to make bank runs less likely in various ways. Diamond and Dybvig worked together on an influential research paper stressing the importance of timing for financial institutions to avoid damaging runs. Bernanke made effective use of research on 1930s bank failures when serving as the chair of the Fed, particularly by instituting emergency lending programs that kept troubled institutions afloat during the global financial crisis. The official announcement from the Nobel Prize organization credits the trio with beginning their award-winning work in the 1980s.
Diamond is a finance professor at the University of Chicago, while Dybvig teaches banking and finance at Washington University in St. Louis.
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