The Small Business Credit Marketin The Transition Countries - The Case Study Of Serbia

The paper discusses the specific aspects of development of the small business credit market in the transition economies, through case study of Serbia. Topics elaborated in the present paper are focused on the problem: "How to create an efficient social and economic environment, which would secure collection of credits from small businesses?" The institutional solutions in Serbia are enabling the small businesses to obtain credits pursuant to three sorts of guarantees: real estate property, movable property and their own reputation. However, implementation of such solutions encounters significant difficulties. The records on ownership over the real estate property are to a large extent inadequate and incomplete. It shall take a relatively long period of time that the appropriate records, harmonized with the European regulations, are formed. The area of collateralized credits for small business is relatively new and faces the problem of a difficult realization of a lawful and timely judicial protection of creditors' interests. However, the basic impediment to establishment of an efficient credit market is the low business reputation of the small businesses. The basic characteristic of small businesses in Serbia is works in the transitional area between the official and the "shadow" economy, which assumes furtherance of a large portion of economy and monetary transactions through unofficial markets. The author's ground thesis is that solutions should be sought not in strict regulations, stern laws and all-inclusive state interventionism, but in self regulation, based upon the development of the culture of mutual trust. It is therefore, in the author's opinion, that the issue of development of the small business credit market in Serbia should be discussed within the chain of three phenomena: creation, improvement and security of the mutual interest of banks and small businesses in course of realization of the following activities: (1) promotion and development of business culture, wherein performance of all financial obligations in a timely fashion plays a key role, (2) completion of the legal and institutional infrastructure for implementation of the infrastructure for implementation of collateralized credits for equipment and reproduction material, (3) promotion and development of new techniques for evaluation of creditworthiness of small businesses pursuant to precise and clear standards, (4) identification of new solutions for (high risk) financing of export projects, pursuant to generating and implementation of high technologies and (5) promotion of new forms of credits for transfer of private property.