The 2022 Nobel Prize winners in Economic Sciences are a trio—Ben Bernanke, Douglas Diamond, and Philip Dybvig—for “research on banks and financial crises,” the Royal Swedish Academy of Sciences said on Monday.
The Nobel Committee lauded their work and said that their research in the early decade of the 1980s had “significantly improved our understanding of the role of banks in the economy, particularly during financial crises, and in showing why it is vital to avoid bank collapses.”
The Committee regarded their work as “invaluable” during the 2008-09 financial crisis and also the coronavirus pandemic.
From 2006 to 2014, Bernanke served as the Federal Reserve’s chairman. He is currently a fellow at the Brookings Institution in Washington, D.C. Dybvig teaches at the Olin Business School at Washington University in St. Louis, whereas Diamond teaches at the University of Chicago Booth School of Business.
In his examination of the Great Depression of the 1930s, Bernanke explained how and why bank runs contributed significantly to the length and severity of the crisis. The work of Diamond and Dybvig focused more on the social role of banks, which is crucial for easing the potential conflict between customers wishing to use their saved money and the economy in dire need of utilizing that money in investments. The latter’s work also showed how governments can prevent bank runs by offering deposit insurance and taking the role of lender of last resort.
Each recipient receives 10 million Swedish krona ($883,000) as part of the award, which is officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
The winners are chosen by the Royal Swedish Academy of Sciences from a list of candidates suggested by the Economic Sciences Prize Committee. The list selects finalists from a pool of about 3,000 professors, previous winners, and invited academy members. Nominees cannot put themselves forward.