Quarterly Journal of Political Science > Vol 12 > Issue 4

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

Rachel L. Wellhausen, University of Texas at Austin, USA, rwellhausen@utexas.edu
 
Suggested Citation
Rachel L. Wellhausen (2017), "Sovereignty, Law, and Finance: Evidence from American Indian Reservations", Quarterly Journal of Political Science: Vol. 12: No. 4, pp 405-436. http://dx.doi.org/10.1561/100.00016131

Publication Date: 07 Dec 2017
© 2017 R. L. Wellhausen
 
Subjects
Econometric models,  Financial markets,  Law and economics,  Legislatures,  American political development,  Comparative political economy,  Intergovernmental relations,  Law,  Rule of law
 
Keywords
American IndianRule of lawHousingSovereigntyPolitical economyNatural experiment
 

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In this article:
Law and Finance 
Public Law 280 as a Quasi-Natural Experiment 
Effects of Variation in Civil Law: American-Indian Housing 
Conclusion 
References 

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.

DOI:10.1561/100.00016131