Topics to be Covered
This module contains lectures covering topics in finance and economic growth. The first lecture analyzes the modern-day financial and credit system from the perspectives of general economics. This lecture, entitled “Finance and Growth,” outlines some of the functions of the financial system. These functions include the “smoothing” or stabilization of consumption, channeling savings into productive investment in businesses, screening and monitoring of investment, and the management of the payment system. In terms of facilitating economic growth, the primary purpose of the financial system is to direct savings to those enterprises that can put the savings to productive use. In addition, a well-functioning financial and credit system sends price signals to investors and lenders, telling them where to direct their capital to gain the greatest returns. Better-functioning financial systems are, according to at least one study, associated with higher subsequent economic growth. Barriers to the smooth functioning of the financial and credit system have created many impediments to entrepreneurship and new business formation in the Native American context, as the next lecture entitled “Native American Economic Development” contends. In these cases one of the main obstacles is the excessive complexity of government regulations governing credit and lending. For information on financial planning strategies useful for tribal governments interested in preserving tribal wealth, generating income, and maintaining access to liquid assets, Native American Finance Officers Association (NAFOA) offers many training opportunities.
The following video features a speaker representing the Federal Reserve Bank of Minneapolis and discusses many of the initiatives the bank has carried out on behalf of the Native American communities in its district. These initiatives unfold in three major areas: strengthening tribal governance institutions like courts, strengthening community development financial institutions, consumer finance initiatives, and financial education. In the following lecture the subject is tribal lending, and the role it plays in plugging gaps in the budgets of tribal communities. The speaker explains how revenues from tribal lending activities complement government grants and gaming revenues, the two other main sources of revenue for most tribal governments. The next lecture, featuring congressional testimony, delves into many of the difficulties tribal businesses face in securing credit and capital. According to this testimony, many prospective borrowers in Indian Country face special problems accessing credit because they cannot mobilize land as collateral, since the ultimate ownership rights lie with the US federal government.
Learning Outcomes
In this module students will be studying various aspects of the financial and credit systems relating to economic growth. Students will gain familiarity with the various functions of the financial system, and the special challenges faced by Native American businesses, individuals, and governments in securing credit and capital necessary for economic development and entrepreneurship.
