The presentation of the Nobel Prizes for the year 2022 ended on Monday, October 10 with the awarding of the Nobel Prize in Economics to former Chairman of the United States Federal Reserve (Fed) Ben Bernanke, Philip H. Dybvig (University of Washington of St. Louis, USA) and Douglas W. Diamond (University of Chicago) “for their research on banks and financial crises”.
The Royal Swedish Academy of Sciences has decided to award the 2022 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig “for research on banks and financial crises.”#NobelPrizepic.twitter.com/cW0sLFh2sj
— The Nobel Prize (@NobelPrize) October 10, 2022
The threesome “has significantly improved our understanding of the role of banks in our economy, particularly during financial crises, as well as how to regulate financial markets”explained the Nobel jury. “An important discovery of their research”whose work began in the 1980s, “has been to show why avoiding the collapse of banks is vital”the committee added.
Role of banks in crises
Aged 68, Ben Bernanke was the boss of the Federal Reserve (Fed) between 2006 and 2014, a tenure marked by the 2008 financial crisis and the fall of the American bank Lehman Brothers. He notably analyzed the “great depression” of the 1930s, the worst economic crisis in modern history. He showed how massive withdrawals were a decisive factor in prolonging and worsening crises.
Douglas Diamond and Philip Dybvig have developed theoretical models showing why banks exist and how their role makes them vulnerable to rumors of their impending collapse. Like the other Nobel Prizes, the prize is endowed with 10 million Swedish crowns (around €920,000), to be shared between the various winners.
Two French people rewarded since 2014
sometimes charged with “fake Nobel”, the award distinguishing economists is the latest of these prizes, the only one that Alfred Nobel himself did not call for in his will. It was added to the list of famous honors by the Central Bank of Sweden in 1969.
In recent years, two French people have been recipients of this prize: Esther Duflo, professor at the prestigious Massachusetts Institute of Technology, in 2019 jointly with the Americans Abhijit Banerjee and Michael Kremer for their work on reducing poverty in the world, as well as than Jean Tirole in 2014 “for his analysis of market power and regulation”.
Last year, the three researchers David Card, Joshua Angrist and Guido Imbens were rewarded by the Nobel Committee for their work which has shed light on many areas such as the labor market, immigration and education.