Former Fed Chair Bernanke shares the Nobel Prize for bank research.

Ben S. Bernanke, a former chair of the U.S. Federal Reserve, and two economists from the United States, Douglas W. Diamond and Philip H. Dybvig, have each been given this year’s Nobel Prize in economic sciences “for studies on banks and financial crises.”
The Royal Swedish Academy of Sciences in Stockholm hosted the Nobel committee on Monday, when they revealed the winner.
The group claimed that their research had demonstrated “why avoiding bank collapses is crucial.”

According to the panel, the laureates’ early 1980s research lay the groundwork for regulating financial markets and handling financial crises.

The 68-year-old Bernanke, who is currently employed by The Brookings

Institution in Washington, D.C., looked into the Great Depression of the 1930s and shown how risky bank runs, which occur when anxious savers withdraw their accounts, can be.

Diamond, 68, of the University of Chicago, and Dybvig, 67, of Washington University in St. Louis, demonstrated how deposit guarantees from the government might stop financial crises from becoming out of control.

Additionally, they caused long-term interest rates to reach record lows and sparked harsh criticism of Bernanke from 2012 Republican presidential hopefuls, who said that the Fed was damaging the value of the dollar and increasing the likelihood of inflation in the future.

The Fed’s activities under Bernanke gave the central bank previously unheard-of levels of power. They failed to stop the worst and longest recession since the 1930s. In retrospect, however, the Fed’s actions were credited with saving the banking sector and preventing a new depression.

The 10 million Swedish kronor (almost $900,000) cash prize for the Nobel prizes will be awarded on December 10.

The economics prize was not established in Alfred Nobel’s 1895 will like the other awards; rather, it was established by

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