Like most forms of financial innovation, there are cost and benefits associated with the securitization of cash flows. From a conceptual perspective, a sound and efficient market for securitization can be supportive of the financial system and broader economy in various ways such as lowering funding costs and improving the capital utilization of financial institutions—benefits which may be passed onto borrowers.This helps issuers and investors diversify risk; and transforming pools of illiquid assets into tradable securities, whick stimulates the flow of credit—an issue of particular relevance for some European countries. However, these features need to be weighed against the potential costs, including the risk that securitization contributes to excessive credit growth in and outside of the formal banking system; the complexity of certain products which make efficient pricing problematic; and the heavy reliance of the industry on credit ratings. If we talk about Croatia, establishment of a model of long term financing that funds collected throught the capital market, this would contribute solving the problem of long term financing. In the fact, it can provide a good source of long-term funds, contribute to the development of competition in the market of long term loans, it can also prevent concentration of long-term financing by institutions and products, increase effectiveness of long-term financing by reducing the interest rate, to provide the financing for longer periods, provide liquidity long-term loans (development of a secondary market), offer high-quality long-term securities with fixed arrival in the Croatian capital market,etc.