University of Chicago Booth School of Business Professor Douglas W Diamond has been awarded the prestigious Nobel Prize in economic sciences. He has been awarded the honour for his path breaking research towards enhancing the understanding of the role of banks in the economy, particularly during financial crisis. His pioneering research has altered perceptions of banks and laid the groundwork for how central bankers, regulators, policymakers and academics approach modern finance.
Diamond is the 97th scholar associated with the University of Chicago to receive a Nobel Prize, and the 33rd to receive the Nobel in economics. In addition to Diamond, seven current UChicago faculty members are Nobel laureates in economics including Prof Michael Kremer (2019), Prof Richard Thaler (2017), Profs Eugene Fama and Lars Hansen (2013), Prof Roger Myerson (2007), Prof James Heckman (2000) and Prof Robert E Lucas Jr (1995).
Also read| Success Story: Muhammad Ali Shihab Stayed in Orphanage, Sold Paan, Passed 21 Govt Exams Before Becoming an IPS
Diamond, who is a Merton H Miller Distinguished Service Professor of Finance, received the Nobel Prize along with two other renowned economists, Ben Bernanke of the Brookings Institution and Philip Dybvig of Washington University in St Louis.
“The University of Chicago has been an amazing place to keep trying to do one’s best research, year after year after year,” said Diamond. Asked whether he thought the work should have received a Nobel Prize earlier, Diamond said no, “You don’t want to win it too young. It goes to your head.”
Diamond is considered a founder of modern banking theory. He is known for his research into financial intermediaries, financial crises and liquidity; his research agenda for the past 40 years has been to explain what banks do, why they do it and the consequences of these arrangements. Diamond’s most influential work has been the Diamond-Dybvig model, which he co-developed with Dybvig on ‘Bank Runs, Deposit Insurance, and Liquidity,’ which was published in the Journal of Political Economy in 1983. Since then, the Diamond-Dybvig model has been used to explain other run-like phenomena in markets during financial crises.
Diamond had earlier collaborated with Raghuram G Rajan, Professor of Finance at Chicago Booth and former Governor of the Reserve Bank of India (RBI). Their research paper on ‘Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking’ was published in the Journal of Political Economy in 2001. They have also co-written a series of influential papers on banking and financial crises.
“Doug embodies the ideal university professor, and he has been a mentor and a friend since the day I interviewed with him (and Rob Vishny) for a position at Chicago, and since I joined Booth in 1991,” said Rajan. “The insights in these papers are deep, and a few generations of researchers (including me) have spent careers writing papers that build on them. The papers have also influenced policy makers–Ben Bernanke, a fellow laureate, later said that Diamond-Dybvig was required reading as the [US] Fed grappled with the financial crisis in 2007-2009. The Nobel Prize is, of course, richly deserved because of the intellectual and practical influence Doug’s work has had. It also could not have gone to a better person.”
Read all the Latest Education News and Breaking News here
Comments
0 comment