announcement and the closing, a period which usually lasts several months, are included in the dataset. We use these dates because, although institutions are not merged, the new owner is in charge and managing the assets as it sees fit—which is apparent from the many changes in the assets of the acquired and not yet merged banks.

In cases of bank liquidations, there are two important dates: (1) announcement of a regulatory action that may suspend some of the licensed operations and/or impose certain restrictions on bank activity, (2) withdrawal of the banking license. The dataset of bank financials recognizes the second date and right after that date, the financials of the exiting banks are excluded. The bank financials during the transition period between the first and the second date, which may last up to several months, are included in the datasets.

- _4.2 Frequency and cost of financial distress_

The first variable of interest in our study is the occurrence of financial distress and the cost of resolving this distress. We define broadly an event of “acute” distress as the occurrence of either government support or private/market solutions that terminate the operations of a bank. Although the latter is a debated typology in the literature, in the case of Kazakhstan, an explicit recognition of an extraordinary operation to resolve financial instability is authorized and issued by the National Bank of Kazakhstan. The defining feature of an “acute” event of distress is an action taken for the main purpose of stabilizing the financial sector. Therefore, our scope does not include monetary or fiscal policy actions aimed at supporting the broader Kazakh economy. This definition presents some limitations as we are unable to include cases of vulnerabilities that are solved in a non-assisted way. Yet, resolution events are responses to events of distress and are observable. We, therefore, opt to classify banks in distress if there is a measurable objective ex-post outcome of this distress (i.e., a government expense) which can be related to cases of acute financial distress.

We further separate bank financial distresses into bailouts and private exits. The first one, “ _bail-out_ ”, captures support provided by the government in the form of equity injection, purchase of non-performing exposures, and provision of funding; the second one, “private exit”, accounts for instability resolved through private/market solutions such as mergers and acquisitions, voluntary liquidations, and forced supervisory closures.<sup>r</sup> In each year for each bank, the variable takes one of three values: 2 if a government expense is recorded, that is there is a transfer of some net expected value from taxpayers to bank shareholders (Metrick and Schmelzing, 2021); 1 if there is a private/market solution to bank distress; and 0 for all the years a bank is operating before undergoing a specific event. We also compute a variable “expenditure” that quantifies the direct monetary spending on government intervention. It takes a positive value for a bank in a year when the government payments are recorded and 0 otherwise.

Table 1 reports the summary of each dependent variable over time. We observe 41 events of distress over the period 2009-2021, 18 private/market resolution events, and 23 government bailouts. The annual event rate (percentage) for our sample is 9.2 percent, suggesting that

> r Indeed, private market solutions may be the result of strategic choices of acquirers and target institutions. Yet, in the case of Kazakhstan, we checked that these operations were carried out because of the distress of the credit institutions subject to such events.

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