The news of this year's Nobel Peace Prize going to Muhammad Yunus and Grameen Bank is inspiring to anybody concerned with the well-being of today's troubled world. Additionally, for all South Asians this joy inevitably comes laced with a pleasing shot of chauvinism. As a practicing economist I have for long followed and admired Muhammad Yunus's experiments with microcredit and bold anti-poverty initiatives. More than a decade ago I heard him give a lecture to a full house in Stockholm. The entire audience was touched by his charisma and his genuine secular and humanistic concerns.

The story of Grameen is by now a familiar one. An ordinary, middleclass professor of economics began with his own money-the equivalent of 27 dollars-to lend to 47 very poor people, encouraging them not to simply eat up the loan but to try to become self-sufficient and break out of the grip of poverty. From this humble beginning, the project to lend small sums of money to the needy grew till it became a global eye-catcher. Today Grameen has 2.5 million customers, who have a loan repayment rate of over 95%, a figure that even commercial banks seldom achieve, and it has a total cumulative loan of $3.5 billion. It is an idea that has been copied and tried in several nations, not just developing countries but even industrialized ones.

As a bank it has had remarkable success but what about Yunus' original aim of helping the poor break out of poverty. How has Grameen performed in terms of this yardstick? In our part of the world we tend not to question anything that is done by a venerated person. But skepticism is always a desirable quality and we must insist on scientific evidence.

For a long time there was very little hard evidence on the anti-poverty impact of Grameen. Some new data and excellent research by Shahidur Khandker, published in the World Bank Economic Review, has now shed light on this question. In 1991-92 the Bangladesh Institute for Development Studies and the World Bank surveyed 1,798 households and then in 1998-99 did a follow-up study of many of the same households, thereby creating a panel dataset. The analysis of this data establishes beyond doubt the huge impact that microfinance has had on the standard of living of the poor.

Households receiving microcredit saw a 5% per annum expenditure growth over 1992-99, which is well over the general average. And, of he total decline in poverty in Bangladesh between 1992-99 over 40% can be attributed to Grameen-Bank type microfinance.

Two pioneering ideas underpin the Grameen experiment. First is the use of women as the main recipient of credit. A full 95% of Grameen's credit goes to women. This has had a major impact on empowering women and through that making society more progressive. Second, it was decided by Yunus to form small groups of people and lend money to individuals within the group while holding the whole group responsible for the repayment. This clever idea of 'peer monitoring' has caused Bangladesh to achieve a loan repayment statistic, which is the envy of the world. It has also fuelled research. Interestingly, one of the first formal models of peer monitoring, inspired by Muhammad Yunus' work, was by another Nobel laureate (of economics), Joseph Stiglitz.

Despite these clever ideas and the many studies, the phenomenal success of Grameen remains a bit of a mystery. Attempts to replicate it have not had the success that it has had in Bangladesh. I have read Yunus' own writings on the subject-such as his superb Commonwealth Lecture of 2003. But I do not fully understand how he did it, and I am convinced that there is no good enough guide to this. Many of the most talented people have this trait-they are better at doing what they do than saying how they did it. I doubt if Tiger Woods' account of how to play golf will ever match up to his golf. Likewise, I doubt Bill Gates will ever be able to explain to us how he achieved what he did. That is in fact what genius is all about.

So all said and done, one has to admit that, while Grameen Bank's success owes a lot to the ideas and hard work, it also has had what other such programs in other countries have not had-the inspiring presence behind it of a maestro.

Dr. Yunus's entrepreneurial skill is remarkable indeed. But what is more remarkable is that, while most people gifted with such a handsome endowment of this skill use it on themselves, he chose to use it so totally on others-the poor and the dispossessed of this world. This is the kind of Nobel Peace Prize that, more than raising the recipient's stature, raises the stature of the prize itself. Congratulations.

Kaushik Basu is Professor of Economics and Director, Center for Analytic Economics, Cornell University.