With a reward Nobel Economics 2022 today honored Ben Bernanke, former chairman of the US central bank (Federal Reserve System, Fed), and his compatriots Douglas Diamond and Philip Dibwig for their work on financial crises and banks.

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The Royal Swedish Academy of Sciences has decided to award the 2022 Sveriges Riksbank Alfred Nobel Memorial Prize in Economic Sciences to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dibvig “for their research on banks and financial crises”.#Nobel Prize pic.twitter.com/cW0sLFh2sj

— Nobel Prize (@NobelPrize) October 10, 2022

The three laureates “significantly improved our understanding of the role of banks in our economy, especially during financial crises, as well as how financial markets are regulated,” the Nobel Committee said.

“The big breakthrough in their research,” which dates back to the 1980s, “was that they showed why it’s vital to avoid bank failures,” the committee added.

At the age of 68, Ben Bernanke was the head of the Federal Reserve System (Fed) from 2006 to 2014, a term marked by the 2008 financial crisis and the collapse of the American bank Lehman Brothers.

Bernanke mainly analyzed the Great Crash of the 1930s, the worst financial crisis in modern history. Basically, he showed how abrupt and sudden withdrawals of cash from banks due to panic or phobia are a decisive factor in prolonging and exacerbating crises.

“Ben Bernanke, in a 1983 article, showed through statistical analysis and historical sources that sudden and sudden bank runs due to panic or fear lead to bank failure, and this was the mechanism that turned a relatively ordinary recession into a stock market crash. The 1930s is the most dramatic and severe crisis the world has seen in modern history,” said John Hassler, member of the committee that awards the Nobel Prize in Economics.

Douglas Diamond and Philip Dibwig, for their part, have developed theoretical models that show why banks exist and why their role in society makes them vulnerable to rumors of imminent collapse.

Like other Nobel Prizes, the Nobel Prize in Economics includes a cash prize of SEK 10 million (€920,000) to be shared by three laureates.

The Nobel Prize in Economics was established by Sweden’s central bank “in memory of Alfred Nobel” and was added in 1969 to the other five traditional prizes (medicine, physics, chemistry, literature and peace), more than 60 years after the others. .