Former Fed boss Ben Bernanke wins Nobel Prize in economics with 2 others for their work on financial crises
- Ben Bernanke, the former chair of the Federal Reserve, won a Nobel Prize Monday for work on financial crises.
- Bernanke will share the prize with American economists and academics Douglas Diamond and Philip Dybvig.
Ben Bernanke, a former head of the US Federal Reserve, won a Nobel Prize for economics Monday for his work on banks and financial crises.
Bernanke, who served as the Fed's 14th chairman between 2006 and 2014, will share the 2022 prize with economists Douglas Diamond and Philip Dybvig. Diamond is a University of Chicago professor, while Dybvig is an academic at Washington University in St. Louis.
The prize recognizes analysis that the three men carried out in the early 1980s, which the Nobel committee said has been of great practical importance in regulating financial markets.
"This year's laureates in the Economic Sciences, Ben Bernanke, Douglas Diamond and Philip Dybvig, have significantly improved our understanding of the role of banks in the economy, particularly during financial crises," the committee said in a statement.
"An important finding in their research is why avoiding bank collapses is vital."
Bernanke was praised for his research into the Great Depression of the 1930s, which the committee described as the wors economic crisis in modern history. He argued that bank collapses can spread financial crisis, and not just be a victim of it.
He found that bank runs — when clients withdraw their money from a bank because they're worried it will fail — had significantly worsened the situation.
"Among other things, he showed how bank runs were a decisive factor in the crisis becoming so deep and prolonged," the committee said.
"When the banks collapsed, valuable information about borrowers was lost and could not be recreated quickly. Society's ability to channel savings to productive investments was thus severely diminished," it added.
Bernanke, Diamond and Dybvig join winners in the Nobel committee's five other prize categories: Physics, Chemistry, Medicine, Literature, and Peace.