Muhammad Yunus

OSLO, Norway — Bangladeshi economist Muhammad Yunus and his Grameen Bank won the Nobel Peace Prize on Friday for their pioneering use of tiny, seemingly insignificant loans — microcredit — to lift millions out of poverty.

Through Yunus's efforts and those of the bank he founded, poor people around the world, especially women, have been able to buy cows, a few chickens or the cell phone they desperately needed to get ahead.

"Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty," the Nobel Committee said in its citation. "Microcredit is one such means. Development from below also serves to advance democracy and human rights."

Yunus, 65, is the first Noble Prize winner from Bang-ladesh, a poverty-stricken nation of about 141 million people located on the Bay on Bengal.

Grameen Bank was the first lender to hand out microcredit, giving very small loans to poor Bangladeshis who did not qualify for loans from conventional banks. No collateral is needed and repayment is based on an honor system.

Anyone can qualify for a loan — the average is about $200. Yunus and the bank will share in the $1.4 million prize as well as a gold medal and diploma.