IDEAS home Printed from https://ideas.repec.org/a/mnb/finrev/v22y2023i1p126-142.html

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

Author

Listed:
  • Balazs Vilagi

    (Magyar Nemzeti Bank, John Von Neumann University)

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.

Suggested Citation

  • Balazs Vilagi, 2023. "The Reasons Behind Banking Crises and their Real Economy Impact - Achievements of the 2022 Nobel Laureates in Economics," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 22(1), pages 126-142.
    • Handle: RePEc:mnb:finrev:v:22:y:2023:i:1:p:126-142
    as

    Download full text from publisher

    File URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-22-1-e1-vilagi.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gorton, Gary B., 2012. "Misunderstanding Financial Crises: Why We Don't See Them Coming," OUP Catalogue, Oxford University Press, number 9780199922901.
    2. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    3. Bernanke, Ben S, 1983. "Nonmonetary Effects of the Financial Crisis in Propagation of the Great Depression," American Economic Review, American Economic Association, vol. 73(3), pages 257-276, June.
    4. Davison, Lee K. & Ramirez, Carlos D., 2014. "Local banking panics of the 1920s: Identification and determinants," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 164-177.
    5. repec:bla:jfinan:v:43:y:1988:i:3:p:749-61 is not listed on IDEAS
    6. Ben S. Bernanke, 2015. "The Federal Reserve and the Financial Crisis," Economics Books, Princeton University Press, edition 1, number 9928-2, December.
    7. Gábor Neszveda, 2018. "The Contribution of Thaler to Behavioural Economics," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 17(1), pages 153-167.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mitchener, Kris & Richardson, Gary, 2020. "Contagion of Fear," CEPR Discussion Papers 14510, Centre for Economic Policy Research.
    2. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95.
    3. Albertazzi, Ugo & Barbiero, Francesca & Marqués-Ibáñez, David & Popov, Alexander & Rodriguez d’Acri, Costanza & Vlassopoulos, Thomas, 2020. "Monetary policy and bank stability: the analytical toolbox reviewed," Working Paper Series 2377, European Central Bank.
    4. Richard S. Grossman & Hugh Rockoff, 2015. "Fighting the Last War: economists on the lender of last resort," Departmental Working Papers 201515, Rutgers University, Department of Economics.
    5. Chen, Qian & Koch, Christoffer & Richardson, Gary & Sharma, Padma, 2025. "Suspensions of payments and their consequences," Journal of Financial Stability, Elsevier, vol. 78(C).
    6. Grodecka-Messi, Anna & Kenny, Seán & Ögren, Anders, 2021. "Predictors of bank distress: The 1907 crisis in Sweden," Explorations in Economic History, Elsevier, vol. 80(C).
    7. Hubert J. Kiss & Ismael Rodriguez-Lara & Alfonso Rosa-Garcia, 2022. "Experimental bank runs," Chapters, in: Sascha Füllbrunn & Ernan Haruvy (ed.), Handbook of Experimental Finance, chapter 25, pages 347-361, Edward Elgar Publishing.
      • Hubert J. Kiss & Ismael Rodriguez-Lara & Alfonso Rosa-Garcia, 2021. "Experimental Bank Runs," ThE Papers 21/03, Department of Economic Theory and Economic History of the University of Granada..
    8. Martin Hellwig, 2018. "Bargeld, Giralgeld, Vollgeld: Zur Diskussion um das Geldwesen nach der Finanzkrise," Discussion Paper Series of the Max Planck Institute for Behavioral Economics 2018_10, Max Planck Institute for Behavioral Economics.
    9. Marodin, Fabrizio Almeida & Mitchener, Kris James & Richardson, Gary, 2024. "Contagion of fear: Panics, money, and the Great Depression," Explorations in Economic History, Elsevier, vol. 93(C).
    10. Lawrence Christiano & Husnu Dalgic & Xiaoming Li, 2022. "Modelling the Great Recession as a Bank Panic: Challenges," Economica, London School of Economics and Political Science, vol. 89(S1), pages 200-238, June.
    11. Fratianni, Michele & Giri, Federico, 2017. "The tale of two great crises," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 5-31.
    12. Manoj Pant & Prabal Roy Chowdhury & Gurbachan Singh, 2009. "Financial Intermediation and Employment," Review of Market Integration, India Development Foundation, vol. 1(1), pages 61-82, April.
    13. Abbassi, Puriya & Iyer, Rajkamal & Peydró, José-Luis & Tous, Francesc R., 2016. "Securities trading by banks and credit supply: Micro-evidence from the crisis," Journal of Financial Economics, Elsevier, vol. 121(3), pages 569-594.
    14. Kanga, Désiré & Soumaré, Issouf & Amenounvé, Edoh, 2023. "Can corporate financing through the stock market create systemic risk? Evidence from the BRVM securities market," Emerging Markets Review, Elsevier, vol. 55(C).
    15. Ebrahimi Kahou, Mahdi & Lehar, Alfred, 2017. "Macroprudential policy: A review," Journal of Financial Stability, Elsevier, vol. 29(C), pages 92-105.
    16. R. Glenn Hubbard, 1991. "Introduction to "Financial Markets and Financial Crises"," NBER Chapters, in: Financial Markets and Financial Crises, pages 1-10, National Bureau of Economic Research, Inc.
    17. Jon Cohen & Kinda Hachem & Gary Richardson, 2021. "Relationship Lending and the Great Depression," The Review of Economics and Statistics, MIT Press, vol. 103(3), pages 505-520, July.
    18. Frederick T. Furlong & Michael C. Keeley, 1986. "Bank regulation and the public interest," Economic Review, Federal Reserve Bank of San Francisco, issue Spr, pages 55-71.
    19. Acharya, Viral & Yorulmazer, Tanju, 2003. "Information Contagion and Inter-Bank Correlation in a Theory of Systemic Risk," CEPR Discussion Papers 3743, Centre for Economic Policy Research.
    20. Cukierman, Alex, 2011. "Reflections on the crisis and on its lessons for regulatory reform and for central bank policies," Journal of Financial Stability, Elsevier, vol. 7(1), pages 26-37, January.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mnb:finrev:v:22:y:2023:i:1:p:126-142. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Morvay Endre The email address of this maintainer does not seem to be valid anymore. Please ask Morvay Endre to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/mnbgvhu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.