Douglas Warren Diamond
October 25, 1953
|Known for||Diamond–Dybvig model|
|Awards||Nobel Memorial Prize in Economic Sciences (2022)|
|Education|| Brown University (BA)|
Yale University (MA, MPhil, PhD)
|Thesis||Essays on Information and Financial Intermediation (1980)|
|Doctoral advisor||Stephen A. Ross|
|Institutions||University of Chicago|
Douglas Warren Diamond (born October 25,1953)   is an American economist. He is currently the Merton H. Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business,where he has taught since 1979. Diamond specializes in the study of financial intermediaries,financial crises,and liquidity. He is a former president of the American Finance Association (2003) and the Western Finance Association (2001-02).
In October 2022,Diamond was awarded the Nobel Memorial Prize in Economic Sciences jointly with Ben Bernanke and Philip H. Dybvig. The prize was awarded in recognition of the economists' "research on banks and financial crises"  
Diamond is best known for his work on financial crises and bank runs,particularly the influential Diamond–Dybvig model published in 1983 and the Diamond model of delegated monitoring published in 1984.  In 2016,he was awarded the CME Group-MSRI Prize in Innovative Quantitative Applications. 
Douglas Warren Diamond was born on October 25,1953.  He was raised in the Hyde Park neighborhood of Chicago by a single mother.  
As an adolescent,Diamond originally intended to study molecular biology. Diamond matriculated at Brown University,where he decided to study economics instead,after taking a course on Milton Friedman and Anna Schwartz's A Monetary History of the United States .   He graduated Phi Beta Kappa from Brown with a Bachelor of Arts degree in economics in 1975.  The following year,and in 1977 Diamond earned Master's degrees,and ultimately a PhD in economics in 1980 from Yale University.  At Yale,both Diamond and future Nobel co-recipient Philip H. Dybvig were advised by Stephen A. Ross. According to Diamond,the two would regularly converse outside Ross' office while waiting for appointments with him.  
A later version of the third chapter of Diamond's 1980 doctoral dissertation "Essays on Information and Financial Intermediation" was republished in 1984 in The Review of Economic Studies under the title "Financial Intermediation and Delegated Monitoring"   This publication coined the term "delegated monitoring" and described Diamond's formal model of delegated monitoring.  According to the Committee for the Nobel Memorial Prize in Economic Sciences,Diamond's model is considered "the first truly micro-founded theory of financial intermediation."  Since its publication,Diamond (1984) has become a key publication in scholarship concerning financial intermediation. 
Since 1979,Diamond has taught at the University of Chicago Booth School of Business. He has held the Merton H. Miller Distinguished Service Professorship since July 2000,having previously held the Theodore O. Yntema Professorship.  From 2010 to 2014,Diamond directed the Fama-Miller Center for Research in Finance at the University of Chicago.
Diamond has additionally served as a visiting scholar at the University of Bonn (1983) and the Bank of Japan (1999),as visiting professor at the Hong Kong University of Science and Technology and MIT Sloan School of Management,and as a professor and teaching fellow at the Yale School of Management. 
In the early 2010s,Diamond was repeatedly floated as a contender for the Nobel Memorial Prize in Economic Sciences. In 2011,Diamond was listed by Thomson Reuters as one of the "researchers likely to be in contention for Nobel honors based on the citation impact of their published research."  He was again named as a contender for the prize in 2013 by economist Hubert Fromlet,  The Wall Street Journal,  and Catherine Rampell,writing for The New York Times. 
On October 10,2022,Diamond received the Nobel Memorial Prize in Economic Sciences jointly with long-time collaborator Philip H. Dybvig and former Chair of the Federal Reserve,Ben Bernanke. Much of the work for which the prize was awarded stems from work Diamond and Dybvig published in the early and mid-1980s. 
Diamond has been married to Elizabeth Cammack Diamond since 1982.  The couple has two children,  including economist Rebecca Diamond. 
He is the son of Leon Diamond,   a psychiatrist,and Margaret Gunkel Seehafer,a social worker and professor. 
James Joseph Heckman is a Nobel Prize-winning American economist at the University of Chicago,where he is The Henry Schultz Distinguished Service Professor in Economics and the College;Professor at the Harris School of Public Policy;Director of the Center for the Economics of Human Development (CEHD);and Co-Director of Human Capital and Economic Opportunity (HCEO) Global Working Group. He is also Professor of Law at the Law School,a senior research fellow at the American Bar Foundation,and a research associate at the National Bureau of Economic Research. In 2000,Heckman shared the Nobel Memorial Prize in Economic Sciences with Daniel McFadden,for his pioneering work in econometrics and microeconomics. As of December 2020,according to RePEc,he is the second-most influential economist in the world.
Full-reserve banking is a system of banking where banks do not lend demand deposits and instead,only lend from time deposits. It differs from fractional-reserve banking,in which banks may lend funds on deposit,while fully reserved banks would be required to keep the full amount of each customer's demand deposits in cash,available for immediate withdrawal.
The Chicago school of economics is a neoclassical school of economic thought associated with the work of the faculty at the University of Chicago,some of whom have constructed and popularized its principles. Milton Friedman and George Stigler are considered the leading scholars of the Chicago school.
A bank run or run on the bank occurs when many clients withdraw their money from a bank,because they believe the bank may fail in the near future. In other words,it is when,in a fractional-reserve banking system,numerous customers withdraw cash from deposit accounts with a financial institution at the same time because they believe that the financial institution is,or might become,insolvent. When they transfer funds to another institution,it may be characterized as a capital flight. As a bank run progresses,it may become a self-fulfilling prophecy:as more people withdraw cash,the likelihood of default increases,triggering further withdrawals. This can destabilize the bank to the point where it runs out of cash and thus faces sudden bankruptcy. To combat a bank run,a bank may acquire more cash from other banks or from the central bank,or limit the amount of cash customers may withdraw,either by a imposing a hard limit or by scheduling quick deliveries of cash,encouraging high-return term deposits to reduce on-demand withdrawals or suspending withdrawals altogether.
Stephen Alan "Steve" Ross was the inaugural Franco Modigliani Professor of Financial Economics at the MIT Sloan School of Management after a long career as the Sterling Professor of Economics and Finance at the Yale School of Management. He is known for initiating several important theories and models in financial economics. He was a widely published author in finance and economics,and was a coauthor of a best-selling Corporate Finance textbook.
A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries,many financial crises were associated with banking panics,and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles,currency crises,and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in significant changes in the real economy.
Lars Peter Hansen is an American economist. He is the David Rockefeller Distinguished Service Professor in Economics,Statistics,and the Booth School of Business,at the University of Chicago and a 2013 recipient of the Nobel Memorial Prize in Economics.
Jean Tirole is a French professor of economics at Toulouse 1 Capitole University. He focuses on industrial organization,game theory,banking and finance,and economics and psychology. In 2014 he was awarded the Nobel Memorial Prize in Economic Sciences for his analysis of market power and regulation.
The MIT Department of Economics is a department of the Massachusetts Institute of Technology in Cambridge,Massachusetts.
Bengt Robert Holmström is a Finnish economist who is currently Paul A. Samuelson Professor of Economics (Emeritus) at the Massachusetts Institute of Technology. Together with Oliver Hart,he received the Central Bank of Sweden Nobel Memorial Prize in Economic Sciences in 2016.
In financial economics,a liquidity crisis is an acute shortage of liquidity. Liquidity may refer to market liquidity,funding liquidity,or accounting liquidity. Additionally,some economists define a market to be liquid if it can absorb "liquidity trades" without large changes in price. This shortage of liquidity could reflect a fall in asset prices below their long run fundamental price,deterioration in external financing conditions,reduction in the number of market participants,or simply difficulty in trading assets.
The Deutsche Bank Prize in Financial Economics honors renowned researchers who have made influential contributions to the fields of finance and money and macroeconomics,and whose work has led to practical and policy-relevant results. It is awarded biannually,since 2005,by the Center for Financial Studies (CFS),in partnership with Goethe University Frankfurt,and is sponsored by Deutsche Bank Donation Fund. The award carries an endowment of €50,000,which is donated by the Stiftungsfonds Deutsche Bank im Stifterverband für die Deutsche Wissenschaft.
The Diamond–Dybvig model is an influential model of bank runs and related financial crises. The model shows how banks' mix of illiquid assets and liquid liabilities may give rise to self-fulfilling panics among depositors. Diamond and Dybvig,along with Ben Bernanke,were the recipients of the 2022 Nobel Prize in Economics for their work on the Diamond-Dybvig model.
The Nobel Memorial Prize in Economic Sciences,officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel,is an economics award administered by the Nobel Foundation.
Markus Konrad Brunnermeier is an economist,who is the Edwards S. Sanford Professor of Economics at Princeton University,and a nonresident senior fellow at the Peterson Institute for International Economics. He is a faculty member of Princeton's Department of Economics and director of the Bendheim Center for Finance. His research focuses on international financial markets and the macro economy with special emphasis on bubbles,liquidity,financial crises and monetary policy. He promoted the concepts of Resilience,liquidity spirals,CoVaR as co-risk measure,the paradox of prudence,financial dominance,ESBies,the Reversal Rate,Digital currency areas,the redistributive monetary policy,and the I Theory of Money. He is or was a member of several advisory groups,including to the IMF,the Federal Reserve Bank of New York,the European Systemic Risk Board,the German Bundesbank and the U.S. Congressional Budget Office. He is a research associate at CEPR,NBER,and CESifo. Brunnermeier is also the President of the American Finance Association in 2023.
Philip Hallen Dybvig is an American economist. He is the Boatmen's Bancshares Professor of Banking and Finance at the Olin Business School of Washington University in St. Louis.
Anil K. Kashyap is the Stevens Distinguished Service Professor of Economics and Finance at the University of Chicago's Booth School of Business. Kashyap's research focuses on price setting,the Japanese economy,monetary policy,financial intermediation and regulation. As an author,he is held in libraries worldwide.
The Princeton University Department of Economics is an academic department of Princeton University,an Ivy League institution in Princeton,New Jersey. The department is one of the most premier institutions for the study of economics. It offers undergraduate A.B. degrees as well as graduate Ph.D. degrees. It is considered one of the "big five" schools in the field along with the faculties at the University of Chicago,Harvard University,Stanford University,and MIT. According to the 2018 U.S. News &World Report,the department ranks as joint No. 1 in the field of economics.
The 2022 Nobel Memorial Prize in Economic Sciences was divided equally between the American economists Ben S. Bernanke,Douglas W. Diamond,and Philip H. Dybvig "for research on banks and financial crises" on 10 October 2022. The award was established in 1968 by an endowment "in perpetuity" from Sweden's central bank,Sveriges Riksbank,to commemorate the bank's 300th anniversary. Laureates in the Memorial Prize in Economics are selected by the Royal Swedish Academy of Sciences. The Nobel Committee announced the reason behind their recognition,stating:
"This year’s laureates in the Economic Sciences,Ben Bernanke,Douglas Diamond and Philip Dybvig,have significantly improved our understanding of the role of banks in the economy,particularly during financial crises. An important finding in their research is why avoiding bank collapses is vital."
Rebecca Diamond is Class of 1988 Professor of Economics at Stanford Graduate School of Business and an associate editor of Econometrica and American Economic Journal:Applied Economics. Her research areas include urban economics and labor economics.