The Reasons Behind Banking Crises and their Real Economy Impact - Achievements of the 2022 Nobel Laureates in Economics

Balazs Vilagi ()
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Balazs Vilagi: Magyar Nemzeti Bank, John Von Neumann University

Financial and Economic Review, 2023, vol. 22, issue 1, 126-142

Abstract: In 2022, the Nobel Prize in economics was awarded jointly to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig, for their research on the financial system that shed light on the reasons for, and the consequences of, bank panics. Diamond and Dybvig showed that the banking system provides socially useful services through maturity transformation and delegated monitoring, and they also pointed out that maturity transformation made the banking system fundamentally vulnerable, which, if left unregulated, may experience bank panics. Bernanke demonstrated the macroeconomic significance of the banking system and analysed the negative macroeconomic impact of bank panics. Their research helped lay the foundations of a regulatory environment that fosters the efficient functioning of the financial system without bank panics.

Keywords: banks; financial crises; financial markets and the macroeconomy (search for similar items in EconPapers)
JEL-codes: E44 G01 G21 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:mnb:finrev:v:22:y:2023:i:1:p:126-142

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