A trio of U.S. economists including Former Federal Reserve chief Ben Bernanke won this year’s Nobel Economics Prize on Monday for research on how propping up failing banks can stave off an even deeper economic crisis.

Bernanke, along with Douglas Diamond and Philip Dybvig won the 2022 price for their work starting in the early 1980s that carried practical importance in regulating financial markets and dealing with financial crises.

“Ben Bernanke, Douglas Diamond and Philip Dybvig, have significantly improved our understanding of the role of banks in the economy, particularly during financial crises,” the Royal Swedish Academy of Sciences said on Monday.

“An important finding in their research is why avoiding bank collapses is vital,” the academy added.

The Academy said that Bernanke showed with statistical analysis that bank runs led to bank failures and this was the mechanism that turned a relatively ordinary recession into the depression in the 30s, the world’s most dramatic, and, severe crisis.

Bank runs can easily become self-fulfilling leading to the collapse of an institution and putting the entire financial sector at risk.

“These dangerous dynamics can be prevented through the government providing deposit insurance and acting as a lender of last resort to banks,” the Academy said.

The trio join such luminaries as Paul Krugman and Milton Friedman, previous winners of the prize.

The majority of previous laureates have been from the United States.

The economics prize is not one of the original five awards created in the 1895 will of industrialist and dynamite inventor Alfred Nobel.

It was established by Sweden’s central bank and first awarded in 1969, its full and formal name being the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Other Nobel prize winners in 2022:

Nobel Prize for Peace - Belarusian human rights activist Ales Byalyatski, Russian human rights organisation Memorial and Ukrainian human rights organisation Center for Civil Liberties

Nobel Prize for Literature– Annie Ernaux, France

Nobel Prize in Chemistry - Carolyn Bertozzi, Morten Meldal and Barry Sharpless

Nobel Prize in Physics - Alain Aspect, John Clauser and Anton Zeilinger for experiments in quantum mechanics

Nobel Prize in Physiology or Medicine - Swedish geneticist Svante Paabo

Source - Reuters

-Agencies