For his work on banking and financial crises, University of Chicago Professor Douglas W Diamond was given the 2022 Nobel Prize in Economics on Monday. He received the honour in collaboration with Washington University’s Philip H. Dybvig and former Fed Reserve chairman Ben Bernanke.
Raghuram Rajan, a former governor of the Reserve Bank of India and economist, penned a piece highlighting Mr. Diamond’s outstanding work in honour of his ‘co-author, colleague, and friend.’
According to Raghuram Rajan, who referred to Douglas Diamond as the ‘father of modern banking theory,’ their 1983 research with Philip Dybvig helped to comprehend how banks’ significant value exposes them to ‘depositor runs.’
Since 1991, Mr. Rajan has known Douglas Diamond, he revealed. He continued, ‘For me, Doug exemplifies the ideal college professor, and he has been a mentor and a friend from the day I met with him (and Rob Vishny) for a position at Chicago.’
The former RBI Governor also discussed Douglas’ delegated monitoring research from 1984, in which he clarified how banks save money by not hiring monitoring companies.
The Nobel Prize winner, according to Mr. Rajan, provided a ‘simple but illuminating’ explanation that sparked additional investigation and study in that field.
Regarding Douglas Diamond’s private life, Mr. Rajan noted that the Nobel laureate is a quick learner as well as a very nice and modest guy.
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