Nobel economics prize: insights into financial contagion changed how central banks react during a crisis

Left to right: Ben Bernanke, Douglas Diamond and Philip Dybvig. The Nobel Foundation

This year’s Nobel prize in economics, known as the Sveriges Riksbank Prize in Economic Sciences, has gone to Douglas Diamond, Philip Dybvig and former Federal Reserve Chair Ben Bernanke for their work on banks and how they relate to financial crises.

To explain the work and why it matters, we talked to Elena Carletti, a Professor of Finance at Bocconi University in Milan.