The Nobel Prize in Economics is Award Former Federal Reserve Board member Ben S. Bernanke and two other academics were commissioned on Monday to conduct a study on banking and the financial crisis.
Economists Douglas W. Diamond of the University of Chicago and Philip H. Divig of the University of Washington in St. Louis received the award, along with Bernanke, who is now at the Brookings Institution in Washington.
Mr. Bernanke in 1983 wrote a thesis This was a breakthrough by illustrating how bank failures can propagate financial crises, not just the consequences of them.
Diamond and Dibvig are the same age wrote a thesis On the risks inherent in maturity transformation, the process of turning short-term borrowing into long-term borrowing. Diamond also writes about how banks monitor their borrowers, noting that when a bank fails knowledge of borrowers is lost, magnifying the effects of disruption.
John Hassler, an economist and member of the Institute for International Economics at Stockholm University, said: “The winners will provide a contemporary perspective on why banks are needed, why they are vulnerable, and what to do about them. It provided a foundation for understanding.” of the Awards Committee.
Diamond spoke by phone at a press conference announcing the award. Asked if he was issuing any warnings to banks and governments at a time when central banks around the world are raising interest rates to combat rapid inflation and markets are in turmoil, Diamond said the financial crisis said it gets worse when people start losing trust. in system stability.
“In a time of the unexpected, I think many people are surprised to see nominal interest rates rising rapidly around the world, but that can create fear in the system.” He said. “The best advice is for your part of the banking sector to be and remain healthy and be prepared to respond to changes in monetary policy in a prudent and transparent manner.”
But he added that the world is better prepared for financial upheaval than it was during the 2008 financial crisis. But he said the vulnerabilities he and Dybvig identified could spread beyond banks to other parts of the financial system, including insurance companies and mutual funds.
The Economics Prize is one of the highest honors in the field and is not technically a Nobel Prize. It is called the Alfred Nobel Memorial Sveriges Riksbank Prize for Economic Sciences because it was not included in the original category set by Alfred Nobel in his 1895 will. Funded by the Central Bank of Sweden and distributed since 1969the Nobel Committee promotes it and lists it on its website.