WHAT DO BANKS DO AND WHY ARE BANK FAILURES COSTLY?: ECONOMICS NOBEL LAUREATES OF 2022

Paper Number :No. 1/2022
Publication Date :Nov. 15, 2022

On 10 October 2022, the Royal Swedish Academy of Sciences awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2022 to three American economists, viz.,

(a) Ben S. Bernanke (Brookings Institution, Washington DC); (b) Douglas W. Diamond (University of Chicago); and (c) Philip H. Dybvig (Washington University, St. Louis)

for their research on "on banks and financial crises". Specifically, it was mentioned in the Nobel citation, "This year's laureates in the Economic Sciences… have significantly improved our understanding of the role of banks in the economy, particularly during financial crises. An important finding in their research is why avoiding bank collapses is vital."

In this context, this Explainer gives a synoptic review of the research of these three economists.