Bangladeshi economist Muhammad Yunus and the bank he founded won the Nobel Peace Prize on Friday for pioneering the use of microcredit, the extension of small loans to benefit poor entrepreneurs.
Grameen Bank has been instrumental in helping millions of poor Bangladeshis, many of them women, improve their standard of living by letting them borrow tiny sums to start businesses.
Loans go toward buying items such as cows to start a dairy, chickens for an egg business, or cell phones to start businesses where villagers who have no access to phones pay a small fee to make calls.
"Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty," the Nobel Committee said.
Yunus said the award was "great news" for his homeland.
"I am so so happy," Yunus told The Associated Press when reached by telephone at his Dhaka home shortly after the prize was announced.
Yunus founded Grameen Bank in 1976, after lending $27 out of his pocket to help 42 women in Bangladesh buy weaving stools.
"They got the weaving stools quickly, they started to weave quickly and they repaid him quickly," said Ole Danbolt Mjoes, chairman of the committee.
"Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development," the Nobel Committee said in its citation.
Today the bank claims to have 6.6 million borrowers, 97 percent of whom are women, and provides services in more than 70,000 villages in Bangladesh. Its model of micro-financing has inspired similar efforts around the world.
"At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable," the committee said.
Yunus and the bank will share in the $1.4 million prize as well as a gold medal and diploma.
The peace prize was the sixth and last Nobel prize announced this year. The others, for physics, chemistry, medicine, literature and economics, were announced in Stockholm, Sweden.
By DOUG MELLGREN
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