The 2022 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, more commonly known as the Nobel prize for economics, has been awarded to Ben Bernanke, Douglas Diamond and Philip Dybvig for their research on banks and financial crises.

Bernanke is a former Federal Reserve chairman who steered the central bank through the financial crisis of 2008. He received the award with fellow economists Diamond and Dybvig.

The trio sought to highlight the role of banks in the economy, particularly during financial crises, as well as how to regulate financial markets, and why avoiding bank collapses is vital.

"The laureates' insights have improved our ability to avoid both serious crises and expensive bailouts," Tore Ellingsen, chair of the committee for the Prize in Economic Sciences said.

This is the 54th Nobel prize for economics that the institution awarded since 1969. The winner receives a cash award for 10 million Swedish kronor ($884,230, £798,090), a diploma, and a gold medal, all of which will be handed over at a formal ceremony in Stockholm on 10 December.

Bernanke's work examined the Great Depression of the 1930s, one of the worst economic crisis in modern history, showing how bank runs were a decisive factor in the crisis becoming so deep and prolonged.

"Among other things, he showed how bank runs were a decisive factor in the crisis becoming so deep and prolonged," the committee noted. "When the banks collapsed, valuable information about borrowers was lost and could not be recreated quickly. Society’s ability to channel savings to productive investments was thus severely diminished."

Diamond's and Dybvig's work took a closer look at how banks offer an optimal solution to this problem.

"By acting as intermediaries that accept deposits from many savers, banks can allow depositors to access their money when they wish, while also offering long-term loans to borrowers," the committee said.

"Diamond demonstrated how banks perform another societally important function. As intermediaries between many savers and borrowers, banks are better suited to assessing borrowers’ creditworthiness and ensuring that loans are used for good investments."

Unlike the other prizes, the economics award was not established in the will of industrialist and dynamite inventor Nobel’s will of 1895 but by the Swedish central bank in his memory. The first winner was selected in 1969.

In 2021, the Royal Swedish Academy of Sciences awarded the prize to two economists, half of the award went to David Card for his research on how the minimum wage, immigration and education affect the labour market. The other half was shared by Joshua Angrist and Guido Imbens for proposing how to study issues that do not easily fit traditional scientific methods.

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