As separate sovereign governments, Indian tribes, just like state and local governments, have an obligation to improve the lives of their citizens. However, tribal governments are much more limited in their ability to access capital. Many tribal communities are often burdened with extremely low socio-economic factors, including low educational achievement, high unemployment, high poverty, and low per capita income. Upwards of $50 billion of unmet capital needs go unfunded each year in Indian Country, in large part due to impediments to tribal access to the capital markets. There are numerous reasons tribes are at a disadvantage, but one little studied is information asymmetry. Relatively poor market awareness is both a cause of tribal underdevelopment and an impediment to any solution. Because most tribes confront information asymmetries for any debt financing strategy they might consider, an empirical study of successful information sharing and integration strategies for tax-exempt bonds will help identify suitable strategies to induce sharing in other domains where tribes operate at an informational disadvantage.
Based on preliminary work (IIS 0534905), this Tribal Finance Information Clearinghouse (TFIC) project will make three unique contributions to information science. First it will collect, aggregate, analyze, and disseminate new digital content consisting of access to market-actionable data on tribal tax-exempt bonds that is not currently available. Second, it will generate data about the factors that impede or induce contributions of private information to a collective information good. (Broadly, insight into how to design information systems that resolve the social dilemmas of information collaboration is an increasingly important.) Finally, the TFIC will be an exercise in informational empowerment. By presenting original financial data as part of a larger infrastructure that includes updated content regarding regulatory, legal, and legislative changes, industry news, and a forum to contribute lessons learned, the TFIC will add significant informational value to transactional data. The TFIC will also support multidisciplinary research on the design and use of information technologies and the resulting impact on government institutions and citizens.
Broader Impact Without empirical data about tribal interactions with capital markets, many research questions remain unanswerable. With this project, for the first time, these may be answerable as the TFIC will offer researchers and policy-makers an unparalleled opportunity to analyze a complete data set related to a significant minority group and to determine whether information asymmetries, legal regulations, or other variables impact capital markets access for tribes. Not only will the outcomes directly impact Native Americans, but the results may be generalizable to other minority enterprises that also face impeded market access. The relatively small number of actors (i.e., 88 tribal issuers since 2001) with durable presence in the data makes study of capital access questions more manageable than might be the case with non-tribal entities.
The TFIC may also impact the marketplace itself, given that a recent study of non-tribal tax-exempt bonds found that the "most critical consequence" of information asymmetry is higher borrowing costs, but that "alleviating information asymmetry" reliably eliminates the risk premium and reduces borrowing costs, particularly for new or infrequent issuers such as tribes.
