The Nobel Prize for Economics 2022 also known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was jointly awarded to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig for research on banks and financial crises.
The Nobel Committee said the work done by Bernanke, Diamond and Dybvig was ‘crucial to subsequent research that has enhanced our understanding of banks, bank regulation, banking crises and how financial crises should be managed’ in a tweet.
The Nobel Committee said the theoretical models prepared by these Nobel Laureates explain why banks exist, ‘how their role in society makes them vulnerable to rumours about their impending collapse and how society can lessen this vulnerability.’
Diamond and Dybvig, two of this year’s three laureates, presented a solution to bank vulnerability. They said deposit insurance from the government presents such a solution.
“When depositors know that the state has guaranteed their money, they no longer need to rush to the bank as soon as rumours start about a bank run,” the Nobel Committee said in a tweet explaining the nature of their accomplishments which won them the prestigious award.
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