Credit Guarantee Schemes, the Importance of Collateral and the Impact of the Creation of SMEs Network in the Process of Bank Crediting

Abstract

High interest rates on loans and access to finance remain among the main problems of businesses in most countries in the world. In order to improve this situation, governments of various countries in the world together with donors and international financial institutions have initiated the creation of various schemes of credit guarantees and the establishment of the SME network. The purpose of these guarantee schemes is to increase lending to businesses by guaranteeing up to 50% of principal (debt) of the business to the bank. Experiences of other countries show that these funds generally have not affected the growth of non-performing loans, but there were occasions when positive effect on the growth of investment has been lacking. In general, developed countries with more stable financial system and banking, have been successful in the creation and growth of new businesses and as result in the job creation.In this study there will be analyzed some empirical evidence of various scientific researchers in regarding the implementation of schemes of loan guarantee and the impact of the creation of the network of business firms, which may also improve the access of enterprises in the external financing through bank loans. The scientific methodology applied in this paper, mainly consists the use of qualitative data, where with numerous studies we have analyzed numerous models of efficiency in the management of loan guarantee funds. The purpose of this analysis is that, based on the experiences of the management of similar funds in Europe and beyond, there will be identified some of the challenges related to the implementation of the Loan Guarantee Fund for Kosova, and will provide recommendations for its management.