Template-Type: ReDIF-Article 1.0

Author-Name: Balazs Vilagi
Author-Workplace-Name: Magyar Nemzeti Bank, John Von Neumann University
Author-Email: vilagib@mnb.hu


Title: The Reasons Behind Banking Crises and their Real Economy Impact - Achievements of the 2022 Nobel Laureates in Economics

Abstract: In 2022, the Nobel Prize in economics was awarded jointly to Ben S. Bernanke,
Douglas W. Diamond and Philip H. Dybvig, for their research on the financial system
that shed light on the reasons for, and the consequences of, bank panics. Diamond
and Dybvig showed that the banking system provides socially useful services through
maturity transformation and delegated monitoring, and they also pointed out
that maturity transformation made the banking system fundamentally vulnerable,
which, if left unregulated, may experience bank panics. Bernanke demonstrated
the macroeconomic significance of the banking system and analysed the negative
macroeconomic impact of bank panics. Their research helped lay the foundations
of a regulatory environment that fosters the efficient functioning of the financial
system without bank panics.

Classification-JEL: G01, G21, E44
Keywords: banks, financial crises, financial markets and the macroeconomy
Pages: 126-142
Volume: 22
Issue: 1
Year: 2023
File-URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-22-1-e1-vilagi.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:22:y:2023:i:1:p:126-142