The Impact of the European Integration Process on the New Member States Banking Sectors

The European integration process has dominated Europe landscape for the last decade. In least than five years between 2004 and 2007 the number of member states has been raised from 15 to 27. An important part of this process is the development of the single European financial market as a mean in achieving a fully functional European community which will allow all member states to obtain a sustainable development and an enhancement in the job creation process. As part of the financial market the integration of the banking system is playing a fundamental role in this task. The aim of this paper is to provide an overview of the impact that the integration of the new twelve member states had on their banking system. In order to achieve that we have underlined the developments in foreign bank development in the new member state while also testing the law of one price in order to establish if it apply in the case of the banking sectors from the new member states. Far from being an exhaustive study on the subject the paper provides the necessary argument for the continuation of the structural reforms and enhancements in the banking sectors of the new member states as a mean for deepening their European integration.