Nobel Economics Prize Goes to Ben Bernanke, Douglas Diamond and Philip Dybvig for Research on Financial Crises

The former Federal Reserve chair and two other academics won the prize for their research into banks and financial crises.

The prize was shared by Mr. Diamond and Mr. Dybvig at Washington University.

Mr. Bernanke wrote a paper in 1983 that stated that bank failures can cause a financial crisis instead of being a result of the crisis.

The paper was written by Mr. Diamond and Mr. Dybvig about the risks of maturity transformation. Mr. Diamond wrote about how knowledge about borrowers is lost when a bank fails.

John Hassler is an economist at the Institute for International Economic Studies at Stockholm University and is a member of the prize committee.

At the news conference, Mr. Diamond spoke by phone. At a time when markets have been in turmoil as central banks around the world raise interest rates, Mr. Diamond was asked if he had any warnings for banks and governments.

He said that sudden increases in nominal interest rates can set off fears in the system. Make sure that your part of the banking sector is perceived to be healthy, and to stay healthy, and respond in a measured and transparent way to changes in monetary policy.

He said that recent memories of the financial crisis in 2008 have made the banking system less vulnerable and that the world is better prepared for any financial upheaval now. He noted that the vulnerabilities that he and Mr. Dybvig have identified can be found in other parts of the financial system.

The economics award is a high honor in the field. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Noble was not one of the original categories set out by Alfred Noble. It has only been given out since 1969 and is funded by Sweden's central bank.