Nobel Laureate Douglas Diamond on Banking & Financial Crises

In this episode, Dr. Shastri Sandy, Brattle Principal, interviews his former professor, Douglas Diamond, Professor of Finance at The University of Chicago Booth School of Business and one of the world’s leading experts on banking and financial crises. Doug was awarded the 2022 Nobel Memorial Prize in Economic Sciences, along with Ben Bernanke and Philip Dybvig, for his work in the field that laid the foundations of modern bank regulation. Doug and Shastri discuss how academic theory connects with real-world implications in the world of banking regulation.

Doug shares his early influences while at Brown University and Yale University, including Jerome Stein, Milton Friedman, Anna Schwartz, and Steve Ross. He discusses his pioneering work with Raghu Rajan in developing a trade-off theory of bank capital and examining the role of bank capital requirements. He highlights his theories and dynamic models developed with Zhiguo He on how debt maturity impacts investment decisions.

He provides insights into the evolving landscape of bank regulation and supervision, including in the context of the recent U.S. banking failures that included Silicon Valley Bank. Additionally, Doug shares about his current research interest in examining the impact of financial development in developing economies and how it contrasts with the impact in developed economies.

Learn more about The Brattle Group Prize in Corporate Finance and the prize-winning papers here.

The opinions expressed are those of the speakers and do not necessarily reflect the views of their employer or its clients. This podcast is for general information purposes and is not intended to be and should not be taken as legal advice.