MUTUAL GUARANTEE SOCIETIES AND THEIR FUTURE POSITION IN THE EUROPEAN UNION.

Small and medium sized companies mainly in Western Europe often lack financial resources but do not have sufficient collaterall for credit financing. This market gap was in some European countries filled by mutual guarantee societies, i.e. non-profit organisations that help SME to better access to loan financing. The societies are founded by the SMEs. They help them with the credit application because they know specifics of economic sector they represent. Thus, they can provide banks with information on local economic situation, technical knowledge and prediction of future revenues. These organisations therefore overcome the information asymmetry. Public fund guarantee is often granted to the mutual guarantee societies, too. Protective members of these societies are common. The paper analyses economic and legal foundation of mutual guarantee societies and consideres possible support of their creation by European Union institution, resp. the Czech Republic. [ABSTRACT FROM AUTHOR]