respectively 35.7% and 36.3% in Indonesia, 100.0% and 35.9% in Korea, 100.0% and 100.0% in Malaysia, 44.9% and 40.8% in the Philippines, and 86% in Thailand.<sup>7</sup> In terms of total assets, the coverage of the total commercial banking systemL by our sample varies between 80% and 100%. In terms of number of nonbank financial institutions, our coverage is 4.0% in Indonesia, 81% in Korea, 54.9% in Malaysia, 27.5% in Thailand and 5.3% in the Philippines. In terms of total assets, the coverage of the total nonbank financial system is between 47.0% ancl 90%.

We use various sources to obtain information on financial institutions' ownership structure, their corporate and family connections, and their fate in the aftermath of the crisis. Information on ownership is obtained from BANKSTAT, BANKSCOPE and Claessens, Djankov and Lang (1999). A financial intermediary is defined as state-owned if at least the government or a state-owned institution holds 50% of the equity. The BANKSTAT database includes the ownership structure of private financial intermediaries (top 10 shareholders), which allows us to discriminate between widely held institutions and institutions belonging to either a family or an industrial conglomerate. Following Claessens et al. (1999), we define an intermediary as "connected" when the largest owner has a stake of more than 20% and it is either a family or an industrial conglomerate.<sup>8</sup> Table II shows the distribution of our sample with respect to ownership structure and connections with industrial groups or influential families.

We consider distress and closu:re during the two years following the onset of the East Asian financial crisis, i.e., from July 1997 up to July 1999, and treat financial distress and closure separately. To identify distressed and closed financial iinstitutions we rely on publicly available sources, including Central Bank's web sites and newspapers articles. We define distress as all those instances in which a financial institution has received external support as well as when it was directly closed. Distress is identified as one of the following: i) the financial institution was closed; ii) the financial institution was merged with another financial institution;'<sup>0</sup> iii) the financial institution was recapitalized by either the Central Bank, the Deposit Insurance Corporation, or an agency specifically created to tackle the crisis;"1 iv) the financial institution's operations were temporarily suspended. Closure is a subset of distress and includes only the _de jure_ failures.

7 No foreign commercial bank is included in the BANKSTAT sample for Thailand.

8 The 20% cutoff-level has been used by several papers, including La Porta et al. (1999), and appears a robust threshold for a single shareholder to establish the effective control over an institution.

9 Using public information only usually underestimates the number of truly distressed cases. We conjecture that this was less so for our sample of countries during this period. Intervention by the IMF, the World Bank and other agencies and the general scrutiny of international markets meant that weak financial institutions were more likely identified as such during this period. Regardlkss, underreporting of distressed financial institutions would create a bias against finding significant results on out logit estimations. '0 Banks merged under distressed conditions are treated as failed and added to the failed group. i These include the Financial Restructuring Authority (FRA) in Thailand, the Indonesian Banking Restructuring Agency (IBRA), and Danaharta in Malaysia.

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