This dissertation analyses the efficiency of issuing state credit guarantees to encourage loans to small and medium-sized enterprises using data from Croatia, an emerging market and the latest member state of the European Union. In that context, with the aim of evaluating the programme of issuing state guarantees, this research is focused on the financial and economic effects as well as the financial sustainability of such programmes. The aim of the research is to determine the efficiency of state guarantees when it comes to enabling access to funds for small and medium-sized enterprises (financial effect), the impact on enterprise development (economic effect) and the organisation and management of state guarantee programmes (financial sustainability). Considering the lack of comprehensive analysis in this area, which would enable the creation of programmes aimed at issuing state guarantees that would be efficient both for tax payers and firms, this research aims to reduce this gap and enable the creation of a proposal consisting of an integral package of measures that aid the design of an efficient and sustainable system of state credit guarantees. Thus, I expect that this dissertation will provide a scientific contribution in favour of state intervention through credit guarantees. The first research question investigates the efficiency of state credit guarantees in improving enterprise development by measuring indirect economic effects of credit guarantees. The second research question deals with the financial sustainability of the state guarantee system in Croatia and the manner in which it is organised and managed. The last research question focuses on a comparative analysis between the state guarantee programme in Croatia and other EU members. The results of the research undoubtedly show that state credit guarantees issued by the Croatian Agency for Small and Medium-sized Enterprises (HAMAG) significantly contribute to the increase in employment and revenues of small and medium-sized enterprises, both nationally and through Nomenclature of Territorial Units for Statistics (NUTS) regionally. The shares of activated guarantees in the total amount of guarantees issued by HAMAG on the level of Croatia and NUTS regions are not negligible but at the same time are not alarming. Considering the predicted annual budget funds for activations, HAMAG guarantee programmes do not pose a threat to the state budget. Equally, the analysis shows that Croatia evenly encourages small and medium-sized enterprises compared to the guarantee agencies of the EU members, with the exception of the number of supported small and medium-sized enterprises within the total number of small and medium-sized enterprises in Croatia. Future research will offer proposals for improving state credit guarantee systems through analysing the differences in interest rates between the enterprises eligible for state guarantees and enterprises that are not eligible as well as the analysis of issued guarantees from European structural and investment funds.