This one-year planning grant will explore the following topic for feasibility.
Intellectual Merit American Indian tribal governments provide a wide range of services to their tribal members, and providing these services requires funding. Unfortunately, tribes have historically been limited in their ability to access capital, a major barrier to economic development. Even as some tribal economies have expanded, tribal access to the capital markets remains impaired due to adverse treatment of tribal debt as compared to municipal debt issued by state and local governments. In order to counteract factors that constrain tribes from tapping into the capital markets effectively, the academic and policy-making communities - and ultimately tribes themselves - need a thorough understanding of modern tribal finance contexts. Academics studying the capital markets related to non-tribal governmental entities have access to substantial information systems, but no such system exists for tribal governments. Not only are tribes at an informational disadvantage, but credit insurers and rating agencies also cannot form a complete picture of the tribal finance market. Thus, tribes must pay a significant penalty on tribal financings because of the uncertainty due to the lack of data. Further, the adverse impact of the differential treatment of tribal debt as compared to other forms of municipal debt has never been empirically quantified.
This cross-disciplinary project will examine questions related to technological empowerment that have economic, sociological, and legal implications. Original data about tribal interaction with the capital markets will be collected and used to develop an analytical information system, providng the empirical foundations for a comprehensive understanding of tribal interaction with the capital markets, specifically identifying those factors that are critical to the success or failure of tribes.
Broader Impact. In addition to its relevance for economic development in Indian Country, development of the tribal finance system will also be an exercise in intergovernmental information sharing. More than 550 federally recognized tribes exist; yet almost no communication between tribes regarding capital market access has taken place. This project will contribute to the emerging economic area of incentive-centered design by designing a system to encourage tribes to disclose previously non-public information about privately-placed financial transactions, as the value to them of doing so increases with the availability of data from multiple tribes - a network effect.
