Douglas W. Diamond specializes in the study of financial intermediaries, financial crises, and liquidity. He is the Merton H. Miller Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business. Diamond is a research associate of the National Bureau of Economic Research and visiting scholar at the Federal Reserve Bank of Richmond. He was president of the American Finance Association and the Western Finance Association and is a member of the National Academy of Sciences. Diamond is a fellow of the Econometric Society, the American Academy of Arts and Sciences, and the American Finance Association. He received the CME Group- Mathematical Sciences Research Institute Prize in Innovative Quantitative Applications in 2016 and the Morgan Stanley-American Finance Association Award for Excellence in Finance in 2012. He received the degree of Doctor Honoris Causa (honorary degree) from the University of Zurich in 2013. Diamond grew up on Chicago and earned a bachelor’s degree in economics from Brown University in 1975. He earned master’s degrees in 1976 and 1977 and a PhD in 1980 in economics from Yale University.

Research Interests

Douglas W. Diamond does theoretical research on financial intermediaries, financial crises, and liquidity His research agenda has been to explain what banks do, why they do it, and the consequences of these arrangements. Diamond's earliest research explained how the economic role of banks generated an essential link between the properties of their assets and the form of their liabilities; he showed how the bank's special assets (special because banks monitor special information about business borrowers) forced them to finance themselves with debt liabilities (deposits) rather than equity and also led banks to diversify across many loans. Research with Philip H. Dybvig demonstrated how banks specializing in creating liquid liabilities (deposits) to fund illiquid assets (such as business loans) may be unstable and give rise to bank runs and a need for deposit insurance. Diamond studied the role of short-term debt in corporate and bank capital structures. Research with Raghuram Rajan studied how banks can use the threat of bank runs to allow them to borrow more than the liquidation value of illiquid bank loans and examines the implications of this financial structure.

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Section 54: Economic Sciences