The Nobel Prize in Economics goes to Ben Bernanke, Douglas Diamond and Philip Dybvig for their work on banking in financial crises

This year's laureates in economics, Ben Bernanke, Douglas Diamond and Philip Dybvig, "have significantly enhanced our understanding of the role of banks in the economy, particularly during financial crises, as well as how to regulate financial markets and manage financial crises," says the institution.

The announcement of the Nobel Prize in Economics, created by the Bank of Sweden and awarded since 1969, closes today the round of delivery of the prestigious awards.

The laureates deserve such an award, the Swedish Academy points out, for their contribution to reducing the risk of financial crises turning into long-term depressions with serious consequences for society.

Ben Bernanke was head of the United States Federal Reserve during the Joint Economic Committee on the economic aid plan with which the Bush administration pressured Congress to allocate 700 billion dollars to the plan to rescue financial institutions.

Bernanke analyzed the Great Depression of the 1930s, the worst economic crisis in modern history, and showed how bank failures were a decisive factor in the Stock Market crisis deepening in society and prolonging it. Using historical sources and statistical methods, Bernanke's analyzes showed which factors contributed decisively to the drop in GDP, with bank failures being the most decisive in prolonging the economic recession.

Douglas Diamond and Philip Dybvig, for their part, developed theoretical models that explain why banks exist, to what extent rumors of an imminent bank collapse can make them vulnerable, and how society can help prevent this from happening.

Diamond and Dybvig presented a formula that worked against this "banking vulnerability": guaranteed deposits. "When savers know that the government has guaranteed their money, they no longer need to rush to the bank as quickly as possible when rumors of a possible bank failure start to spread."

Diamond has also shown the extent to which banks play an important social role; "As intermediaries between savers and borrowers, banks are better equipped to assess the creditworthiness of borrowers and ensure that loans go toward making good investments."