Ben Bernanke, former head of the U.S. Federal Reserve, and two other American economists were awarded the Nobel Prize in Economic Sciences on Monday. Bernanke is credited with helping lead the United States out of the 2007-2008 financial crisis. The two other winners were Douglas W. Diamond and Philip H. Dybvig. The Nobel committee at the Royal Swedish Academy of Sciences said the three financial experts showed “why avoiding bank collapses is vital.” John Hassler of the prize committee said: “Financial crises and depressions are kind of the worst thing that can happen to the economy.” The three men worked during their university careers to understand how bank failures can cause economic downturns. Before their work, most economists saw bank failures as a result of but not a cause of economic problems. Research by Diamond and Dybvig in the 1980s showed that governments could provide assistance to protect money in banks and prevent financial crises from getting worse.
