This year's Nobel laureates of economics "have significantly improved our understanding of the role of banks in the economy, particularly during financial crises, as well as how to regulate financial markets and manage financial crises," the institution said during the award ceremony.

Ben Bernanke, Douglas Diamond and Philip Dybvig receive the Nobel Prize for their contribution to reducing the risk of financial crises turning into long-term depressions with serious consequences for society.

"Their analyses have been of great practical importance in regulating financial markets and dealing with financial crises," the Swedish institution explained. "The laureates' insights have improved our ability to avoid both severe crises and costly bailouts," said Tore Ellingsen, chairman of the Economics Prize Committee.

Bernanke analyzed the Great Depression of the 1930s, the worst economic crisis in modern history, and showed how bank failures were a decisive factor in how the stock market crisis deepened in society and was prolonged. Using historical sources and statistical methods, Bernanke showed which factors contributed decisively to the fall in GDP, with bank failures being the most decisive in prolonging the economic recession, reported BBC.

On the other hand, Diamond and Dybvig developed theoretical models that explain why banks exist, to what extent rumors about an imminent bank collapse can make them vulnerable and how society can contribute to prevent it from happening.

They presented a formula that worked against this "banking vulnerability": guaranteed deposits.

With the Economics Prize, the Nobel Foundation's multi-subject award season comes to an end. The laureates will receive their respective awards at an official ceremony in Stockholm on Nov. 10, while the Peace Prize will be awarded in Oslo.