P-values are in brackets. *, **, *** represent statistical significance at the 10%, 5%, and 1% level respectively. Standards errors allow for clustering at the Country level. All models are estimated via three methods: ordinary least squares (OLS) model, robust regression model and instrumental variable model. In dropping outlier OLS model, top 5% samples on each dependent variable are dropped except % of Women Borrowers. Though we do not present the coefficients to conserve space, all models include all of the following controls; annual % of inflation rate (GDP deflator), annual % of GDP growth, Rule of law , Bank overhead costs / Total assets, Ease of doing business index, Bank Credit / GDP, regional dummies (Europe and Central Asia, Latin America and Asia, Sub-Saharan Africa, South Asia and East Asia and Pacific, omitting Middle East and North Africa), status dummies (commercial bank, credit union / coop, NGO, non-bank financial institution, omitting rural bank), lending methodology dummies (individual and solidarity lending, omitting village banking) and log of MFI's total asset values. The details of instrumental variable model are shown as below.

*1 1st excluded IV is Supervisory Forbearance Discretion, and 2nd is Independence of Supervisory Authority - Political respectively

*2 1st excluded IV is Supervisory Forbearance Discretion, and 2nd is Percent of 10 Biggest Banks Rated by Domestic Credit Rating Agencies respectively

- <u>Panel C:  Regulatory and supervisory capacity for microfinance (0 4)</u>

||||<br>Dep var|<br>: % of Women b|<br>orrowers|||
|---|---|---|---|---|---|---|---|
|_Microscope variable_|Robust Reg<br>w/o Lending<br>methodology<br>dummy|OLS w/o<br>Lending<br>methodology<br>dummy|Robust Reg|OLS|OLS w/ the<br>same<br>observations<br>to IV|Instrumental<br>Variable 1*<sup>1</sup>|Instrumental<br>Variable 2*<sup>2</sup>|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|
|Regulatory and supervisory capacity for microfinance (0-4)|-0.0398***|-0.0639**|-0.0631***|-0.0857***|-0.0729***|0.0027|-0.0099|
||[0.000]|[0.022]|[0.000]|[0.000]|[0.001]|[0.964]|[0.868]|
|Observations|713|713|611|611|530|530|510|
|Number of countries|40|40|39|39|29|29|28|
|R-squared|0.449|0.396|0.533|0.499|0.486|0.443|0.478|
|Adjusted R-squared|0.435|0.381|0.518|0.483|0.466|0.422|0.457|
|F statistic for weak identification||||||2.598|1.722|
|Shea partial R-squared||||||0.105|0.108|
|Hansen J statistics||||||0.188|0.131|

- - <u>Panel D: Regulatory framework for deposit taking (0</u>

||||<br>Dep var:|<br>% of Women b|<br>orrowers|||
|---|---|---|---|---|---|---|---|
|_Microscope variable_|Robust Reg<br>w/o Lending<br>methodology<br>dummy|OLS w/o<br>Lending<br>methodology<br>dummy|Robust Reg|OLS|OLS w/ the<br>same<br>observations<br>to IV|Instrumental<br>Variable 1*<sup>1</sup>|Instrumental<br>Variable 2*<sup>2</sup>|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|
|Regulatory framework for deposit-taking (0-4)|-0.0567***|-0.0958**|-0.0244*|-0.0864*|-0.0566|0.0036|-0.036|
||[0.000]|[0.030]|[0.086]|[0.061]|[0.138]|[0.959]|[0.450]|
|Observations|713|713|611|611|530|530|510|
|Number of countries|40|40|39|39|29|29|28|
|R-squared|0.459|0.393|0.568|0.461|0.457|0.445|0.481|
|Adjusted R-squared|0.446|0.378|0.554|0.444|0.436|0.424|0.460|
|F statistic for weak identification||||||2.336|5.651|
|Shea partial R-squared||||||0.184|0.289|
|Hansen J statistics||||||0.188|0.154|

31