Women-owned businesses are 24% more likely to be forced into liquidation during bankruptcy than male-owned ones, but primarily when judges are overworked.
The study found that while men and women have similar credit quality before filing, 'busy' judges default to harsher outcomes for women as a cognitive shortcut. This suggests that the survival of a small business depends less on its financial health and more on the specific workload of the judge assigned to the case.
When She Fails: Women Entrepreneurs and Gender Gaps in Business Bankruptcy
SSRN · 6475198
Female-owned firms are more likely to be pushed into liquidation and less likely to emerge successfully from bankruptcy than observably similar male-owned firms, and the gap widens sharply when courts are congested. In our data on U.S. small-business bankruptcies, female-owned firms are 24 percent more likely to file under Chapter 7 and, conditional on Chapter 11, are considerably less likely to receive a discharge. Evidence from 1.9 million SBA loan records shows little difference in observable