Douglas Diamond, a widely respected finance professor who has worked for the Booth School of Business since 1979, became the 97th scholar associated with university to be Nobel winners and the 33rd in economics, according to the university.
The official announcement from the the Royal Swedish Academy of Sciences came just before 5 a.m. Chicago time. While calling the award a high honor in front of colleagues and members of the media on campus Monday, Diamond told reporters that there was a moment during the early morning phone call from Sweden that he thought it might be a prank from colleagues.
“So I heard this Swedish voice on there saying, ‘Are you professor Doug Diamond?’ ... I said, ‘Yes.’ I did know this was the day that they announce the prize, and I thought it was probably legit,” he said to laughter. “But you never know — I have some friends with a good sense of humor.” Diamond’s early research in the 1980s with Dybvig created theoretical models that illustrated why banks succeed and fail, and explained the connection between liquidity and mass bank withdrawals by worried customers. Among their recommendations, the pair suggested government-backed bank deposit insurance as a way of counteracting jittery customers.
Diamond’s work with Dybvig is considered seminal among economists, and Diamond’s advice was essential in the days after the 2008 collapse.
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