The role of the foreign banks in the 5 EU member states

<title>Abstract</title> The article tests if foreign banks have lowered their market share in the Baltic States, Romania and Bulgaria during the recent financial crisis after 2007, due to the perception of risk exposure in local markets. It has been proved that, the credit supply by foreign banks in the Baltic States, Romania and Bulgaria has remained relatively stable during the latest crisis by TSLS method. Foreign ownership generally utilizes derivative products more than domestic banks in the NMSs because they have more expertise in hedging and can diversify risks effectively with their larger parent banks in their home country. The reaction of foreign banks abroad depends on the capital adequacy of the parent bank and the business opportunities in the host economies.