Economists win Nobel prize for showing why banks fail

Philip Ball in Nature:

Ben Bernanke at the Brookings Institution in Washington DC, Douglas Diamond at the University of Chicago in Illinois and Philip Dybvig at Washington University in St. Louis, Missouri, shared equal parts of the 10-million-Swedish-krona (US$915,000) award, formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

The research of the three laureates has helped to explain both why banks exist in the form they do and why they have fragilities that can be devastating to the economy, as shown in the Wall Street crash of 1929 and the Great Depression that followed, and in the global financial crisis of 2007–09. Insights from their work were essential in enabling banks, governments and international institutions to cope with the COVID-19 pandemic without catastrophic economic consequences, the Nobel committee said in its 10 October announcement.

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