For significantly improving “our understanding of the role of banks in the economy, particularly during financial crises,” the Sveriges Riksbank Prize in Economic Sciences for 2022 was awarded to three American economists: Ben S Bernanke, Douglas W Diamond and Philip H Dybvi.
- Through statistical analysis and historical source research, Bernanke demonstrated how failing banks played a decisive role in the global depression of the 1930s, the worst economic crisis in modern history. The collapse of the banking system explains why the downturn was not only deep, but also long-lasting.
- Both Diamond and Dybvig worked together to develop theoretical models explaining why banks exist, how their role in society makes them vulnerable to rumours about their impending collapse, and how society can lessen this vulnerability.
Why it is not actually a ‘Nobel Prize in Economics’?
- Unlike the other Nobel prizes, the economics award wasn’t established in the will of Alfred Nobel but by the Swedish central bank in his memory in 1968, with the first winner selected a year later. It is the last prize announced each year.
- The prizes as established by his will are the Nobel Prize for Physics, the Nobel Prize for Chemistry, the Nobel Prize for Physiology or Medicine, the Nobel Prize for Literature, and the Nobel Prize for Peace.