Douglas W. Diamond

About

Douglas W. Diamond is the Merton H. Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business, where he has been a faculty member since 1979. He specializes in the study of financial intermediaries, financial crises, and liquidity. Diamond is renowned for his groundbreaking research on banks and financial crises, which earned him the 2022 Nobel Memorial Prize in Economic Sciences (Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel). He has also served as president of the American Finance Association and the Western Finance Association, and is a fellow of the Econometric Society, the American Academy of Arts and Sciences, and the American Finance Association. Diamond is a member of the National Academy of Sciences and a research associate of the National Bureau of Economic Research, as well as a visiting scholar at the Federal Reserve Bank of Richmond. Diamond received his bachelor's degree in economics from Brown University in 1975 and earned his PhD in economics from Yale University in 1980. He has taught at Yale and held visiting professorships at the MIT Sloan School of Management, the Hong Kong University of Science and Technology, and the University of Bonn. His contributions to finance have been recognized with prestigious awards including the Morgan Stanley-American Finance Association Award for Excellence in Finance in 2012 and the CME Group-Mathematical Sciences Research Institute Prize in Innovative…

Research topics

• Financial system
• Economics
• Finance
• Business
• Monetary economics

Selected publications

• A Theory of Debt Maturity: The Long and Short of Debt Overhang

  The Journal of Finance · 2013-11-04 · 305 citations

  article1st authorCorresponding

  ABSTRACT Debt maturity influences debt overhang, the reduced incentive for highly levered borrowers to make real investments because some value accrues to debt. Reducing maturity can increase or decrease overhang even when shorter term debt's value depends less on firm value. Future overhang is more volatile for shorter term debt, making future investment incentives volatile and influencing immediate investment incentives. With immediate investment, shorter term debt typically imposes lower over…

  PublisherDOI

• Liquidity Requirements, Liquidity Choice, and Financial Stability

  Handbook of macroeconomics · 2016-01-01 · 113 citations

  book-chapter1st authorCorresponding
  PublisherDOI

• The Spillovers from Easy Liquidity and the Implications for Multilateralism

  IMF Economic Review · 2019-11-19 · 61 citations

  article1st authorCorresponding
  PublisherDOI

• Liquidity Requirements, Liquidity Choice and Financial Stability

  National Bureau of Economic Research · 2016-03-01 · 35 citations

  reportOpen access1st authorCorresponding

  We study a modification of the The incomplete information means that the bank is not automatically incentivized to always hold enough liquid assets to survive runs. Regulation similar to the liquidity coverage ratio and the net stable funding ratio (that are soon be implemented) can change the bank's incentives so that runs are less likely. Optimal regulation would not mimic these rules.

  PublisherDOI

• Pledgeability, Industry Liquidity, and Financing Cycles

  The Journal of Finance · 2019-07-04 · 33 citations

  articleOpen access1st authorCorresponding

  ABSTRACT Why do firms choose high debt when they anticipate high valuations, and underperform subsequently? We propose a theory of financing cycles where the importance of creditors’ control rights over cash flows (“pledgeability”) varies with industry liquidity. The market allows firms take on more debt when they anticipate higher future liquidity. However, both high anticipated liquidity and the resulting high debt limit their incentives to enhance pledgeability. This has prolonged adverse eff…

  PublisherOA PDFDOI

Recent grants

• Understanding Credit Crises

  NSF · $443k · 2010–2016

Frequent coauthors

• Raghuram G. Rajan

  Hoover Institution

  94 shared

• Anil Kashyap

  Centre for Economic Policy Research

  28 shared

• René M. Stulz

  13 shared

• Kenneth R. French

  Dartmouth College

  12 shared

• John H. Cochrane

  Stanford University

  12 shared

• Darrell Duffie

  National Bureau of Economic Research

  12 shared

• Matthew J. Slaughter

  Kaiser Permanente Center for Health Research

  12 shared

• Frederic S. Mishkin

  National Bureau of Economic Research

  11 shared

Education

• B.A.

  Brown University

  1975

• M.S.

  Yale University

  1976

• M.S.

  Yale University

  1977

• Ph.D.

  Yale University

  1980

Awards & honors

• Nobel Memorial Prize in Economic Sciences (2022)
• Onassis Prize in Finance (2018)
• CME Group- Mathematical Sciences Research Institute Prize in…
• Morgan Stanley-American Finance Association Award for Excell…

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