Sovereignty, Law, and Finance: Evidence from American Indian Reservations

Rachel L. Wellhausen

Quarterly Journal of Political Science, 2017, vol. 12, issue 4, 405-436

Abstract: In 1953, Congress supplanted the tribal civil law on some American-Indian reservations with the civil law of the US state in which they are located. In the vein of cross-national literature on law and finance, I demonstrate that Congress's action reduced external financial actors' uncertainty over the enforcement of contracts on some reservations. Using novel data on 20,000 home loans to tribal members guaranteed by a US Housing and Urban Development program (1996–2013), I find a causal effect at the individual level: mortgage holders governed by US state civil law pay consistently lower interest rates. Thus, externally imposed law generates long-term benefits for tribal members. Nonetheless, qualitative extensions suggest that neither the presence nor the magnitude of the effect offsets many tribes' prioritization of their sovereignty, rather than the individual-level economic benefits that can result from compromising it.

Keywords: American Indian; Rule of law; Housing; Sovereignty; Political economy; Natural experiment (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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