Nobel prize for Economic Sciences 2022.

The Nobel Prize for Economic Sciences has gone to three individuals for their role in research on how banks function.

The Nobel prize for Economic Sciences 2022 to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig “for research on banks and financial crises.

Ben S. Bernanke:
- Ben Bernanke analysed the Great Depression of the 1930s.
- Through statistical analysis, Bernanke demonstrated how failing banks played a decisive role in the global depression of the 1930s.
- It helped in understanding the importance of well-functioning bank regulation.
Douglas W. Diamond and Philip H. Dybvig:
- Both 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.
- They presented a solution to bank vulnerability, in the form of deposit insurance from the government.
- When depositors know that the state has guaranteed their money, they no longer need to rush to the bank as soon as rumours start about a bank run.
- Douglas W. Diamond also showed how banks perform a societally important function. As intermediaries between savers and borrowers, banks are better suited to assessing borrowers’ creditworthiness and ensuring that loans are used for suitable investments.

Understanding of the banking system:
- Their research has helped in understanding some of the fundamental aspects of the banking system such as the role of banks in society, their operating mechanism, their vulnerability to collapse and dealing with bank collapses etc.
Banking regulation:
- Their insights on vulnerabilities of the banking system have laid the foundation for modern-day banking regulation frameworks.
Averting financial crisis:
- Their research has provided some crucial inputs for the economic policies during the 2008 global financial crisis and also helped during the 2020 global pandemic and ensured the later crisis did not develop into a new depression.

The will of the Swedish scientist Alfred Nobel established the five Nobel prizes in 1895.
The Nobel Prizes are a set of recognition given to the fields of chemistry, literature, peace, physics, and physiology or medicine by the Nobel Foundation.
The Nobel Foundation is a private institution established in 1900 and has ultimate responsibility for fulfilling the intentions of Alfred Nobel’s will.
The prizes in Chemistry, Literature, Peace, Physics, and Physiology or Medicine were first awarded in 1901.

Content Source: Indian express