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Early-stage entrepreneurial activity in 2020 had fallen sharply from its pre-pandemic high in the UK as the economy was essentially shut down for long periods due to COVID-19 This decline was due to fewer nascent entrepreneurs than normal – that is, individuals in the first three months of starting their new business venture Nevertheless, around two-thirds of working-age adults looking to set up a business within three years said the pandemic had influenced their decision to re-assess their future engagement with the labour market As in previous economic downturns it is the small business community that drives the recovery across all sectors of the economy. UK entrepreneurs once again stand ready to rise to the challenges and opportunities created by the Coronavirus pandemic and the economic fallout from Brexit, a new report says. The latest Global Entrepreneurship Team (GEM) UK report found that although around of half budding entrepreneurs said that the UK government had so far dealt effectively with the economic consequences of the pandemic, there must be improved programmes, financial support and advice to start-ups and scale-ups through different stages of the business life cycle. GEM is the world’s largest survey of entrepreneurship and is the only global research source that collects data on entrepreneurship directly from individual entrepreneurs. It measures various rates of entrepreneurship in 43 countries in 2020. GEM’s UK team – which is led by Professor Mark Hart of Aston University – compared attitudes, activity and aspirations in the UK, Germany and the United States as well as the four home nations of the UK. Access to finance remained one of the major obstacles to entrepreneurial activity in the UK. Enhanced tax benefits for entrepreneurs, such as tax breaks for start-ups and businesses in difficulty to reduce early exits and better tax incentives for recruitment, investment in managerial and digital practices and skills were also highlighted1. The report also called for more entrepreneurial education, especially at school age as well as improved technical education and improved links between the educational system and industry to boost growth post-COVID and post-Brexit. It found that the UK still lags behind many comparable economies in this respect. Mark Hart, professor of small business and entrepreneurship at Aston Business School and deputy director of the UK’s Enterprise Research Centre, said: “The GEM survey undertaken in the last few months of 2020 showed a sharp fall in the number of individuals in the early stages of setting up a new business compared to the pre-pandemic high in 2019. “This is hardly surprising, but the analysis has also shown that the entrepreneurial foundations of the economy and society are still strong and these will be crucial for the recovery after the pandemic and in dealing with the ongoing economic fallout from Brexit. “Those ethnic-minority communities that have borne the brunt of the pandemic in terms of infection, hospitalisation and sadly deaths demonstrated their resilience by maintaining their previous levels of early-stage entrepreneurial activity (TEA rate) which were significantly higher than for the non-ethnic minority population. “Clearly, the pandemic has had no damaging impact on the level of entrepreneurial activity by immigrants and ethnic-minorities although it has depressed it for life-long residents and the non-ethnic population. “There is undoubtedly an appetite for people to start their own businesses in the next three years and many report new opportunities because of the pandemic but they are delaying the actual decision to get the business operational.” The full GEM UK impact report, sponsored by NatWest, is available for download here.
Brexit: UK services are losing out to EU rivals – but Asia could be big winner
"Seven months after Britain’s exit from the EU, the chilly effects on UK trade are being felt. Total exports of UK goods and services were down by 13% (£36 billion) and imports down 22% (£66 billion) for January to May 2021 compared to the same period in 2019." Professor Jun Du, Aston Business School Singapore looks like one of the big winners from Brexit. joyfull In a separate new ONS report into UK services, exports and imports fell 12% and 24% in the first quarter of 2021 compared to the same period in 2019. To some extent this is due to the pandemic, but the decline with EU countries was more severe (exports down 15% and imports by 39%), which suggests Brexit was relevant too. The difference between services exports to EU and non-EU countries was particularly marked in sectors like construction (-43% vs +24%), maintenance and repair (-62% vs +11%), and manufacturing services (-40% vs -12%). It seems to confirm that the UK’s services offering has been made less competitive by the EU-UK Trade and Cooperation Agreement hardly covering such business. This has left EU members free to decide whether to allow different UK providers into their markets. But as we shall see, other services exporting countries outside the EU may also benefit as a result. In our recent paper, Ireland looked like the big winner. It has probably benefited from firms relocating and business being re-routed from the UK, not to mention low corporation tax and a young well-educated workforce. Between 2016 and 2019, Ireland’s services exports rose 24% (that’s €144 billion or £123 billion), driven by financial services, IT and transport. Speculation still abounds about which other EU cities will benefit in the medium term. Amsterdam surpassed London as Europe’s largest share-trading centre in January by absorbing much trade in euro-denominated assets, though London has been back on top recently. Other potential winners include Frankfurt (banking), Luxembourg (banking and asset management) and Paris (financial, professional and business services). Even a less serious contender like Berlin can attract tech talents thanks to its culture clusters and affordability. On the other hand, most financial traders have so far remained in London. The city is still strong in hosting stock market flotations and other forms of capital raising. And the flow of financial jobs out of London has been a fraction of what remainers predicted. A four-year regulatory transition period for areas like data protection and electronic trade will undoubtedly be helping. London vs EU rivals is only half the story. James Padolsey/Unsplash, CC BY-SA Yet all this misses a bigger picture, namely that Europe’s ability to provide services may have been weakened overall. Imagine a group of US investors wants to invest £1 billion in European shares and other financial assets. In the past it might have set up a fund in London, making use of the city’s network of lawyers, accountants, bankers and other finance professionals, while filtering some of the work to specialists in, say, Paris and Frankfurt for issues related to France and Germany. But now Brexit means the fund can’t invest in certain EU securities from London. The investors would have to set up a second fund in, say, Dublin to get exposure to all the EU assets they want. The additional expense and time involved makes them decide it will be more lucrative to set up an Asia-focused fund in Singapore instead. When you multiply this effect across every sector, it is potentially huge. Certainly some investors will decide to either switch attention from the UK to EU countries, or to live with the extra cost of doing business across both the UK and EU. But others are deciding that an opportunity somewhere else in the world now looks more attractive. The danger is that this adds up to a global shift in economic weight over time. In fact, we could be seeing signs of this already. Winners and losers In follow-on research that we have yet to publish, we have been analysing the services exports of the major service providers in Europe and globally, using trade data jointly collected by the World Trade Organization (WTO) and the Organisation for Economic Cooperation and Development (OECD). The data shows the UK was and is the biggest services exporter in Europe and second only to the US worldwide, but appears to have been losing ground since Brexit. Ireland and the Netherlands are the major growth stories in Europe, while China, India and Singapore are leading the way elsewhere. Services exports by country, 2019 vs 2015 Trends in services exports. Left: 2015 data in solid coloured bars; 2019 change in yellow markers. Right: Green bars represent accelerating service growth; red bars represent decelerating growth. BaTIS The UK’s services growth trend fell 11% in the 2016-2019 period compared to 2010-15. This backs up our recent published research finding that the UK’s global share of exported services fell from 8.9% in 2005 to 7% in 2019. Meanwhile, France, Spain, Italy and Belgium’s growth has also been declining, while Germany, the Netherlands, Switzerland, Luxembourg, Austria and also the US were static. Ireland was the fastest growing services exporter among all, but Singapore and India gained momentum too. Strikingly, we see increasing growth in Asia between 2016 and 2019 in sectors like travel, financial, IT and creative services. This includes extraordinary growth in Singapore in finance, business, insurance and pension provision, and also in China in numerous segments. It looks like nothing short of a boom. Shanghai has been on the up and up. Krzystsztof Kotkowicz, CC BY-SA This may partly reflect the industrial transformation taking place in the Asian developing world from manufacturing to services. It may also capture a long-term shift of services centres from the west to the east – a reshuffle on a truly global scale. But at the same time, it’s evidence that Brexit has weakened the UK as the European centre for services. Yes, business shifted to Ireland (and Luxembourg) to some extent, but that could be hiding a wider collective setback. The question for the years ahead, for the UK and its European services peers, is whether they can come up with arrangements that help maintain their collective strengths – and to what extent they can exploit opportunities elsewhere, particularly on developing countries, where US services providers have traditionally been far ahead. This article was co-written by Professor Jun Du and Dr Oleksandr Shepotylo.
How to find a job in Canada and position yourself as an ideal candidate
Whether you’ve just received your Confirmation of Permanent Residence (CoPR) or have recently moved to Canada, finding employment and getting back in your field of work is always top of mind for many. As you begin your job search in Canada, there are a few things that are must-haves: A Social Insurance Number (SIN) – A nine-digit number that you need to work in Canada or to have access to government programs and benefits. Credential assessment for occupations such as teachers, accountants, medical professionals, engineers, social workers, etc. Credential assessment is a process through which you can get certified, registered, or licensed to practice your occupation in Canada. A Canadian-style resume and cover letter. Remember to customize your resume for each job application. Tip: To learn about the scope of your role in Canada and get deeper insights into specific job markets such as Information Technology (IT), Finance, Sales and Marketing, Project Management, Healthcare, Human Resources (HR), and others, download Arrive’s free guide for the Canadian job market. Once you’re equipped with these basic tools and resources, you’re ready to start looking for relevant opportunities. Here are a few ways you can get started with your job search in Canada. 8 ways to find a job in Canada 1. Browse job search websites Most job seekers use job search websites as the starting point while looking for opportunities. In Canada, many locally-popular sites provide more than just job listings. You can get access to employment trends, salary trends, career-planning tools, and industry information. The Canadian government’s Job Bank website is one such exhaustive resource. It is a job-listing aggregator so it pulls listings from multiple job sites which makes it convenient to browse opportunities. You can also check the provincial and territorial websites for more newcomer employment resources. What are the best job sites in Canada? Some popular job search websites are: LinkedIn Jobs, Indeed, Monster, Glassdoor, Workopolis, CareerBuilder, and SimplyHired. If you’re looking for freelancing opportunities or remote work, sites like UpWork, Fiverr, Jobboom, Jobillico, and Jobspresso are good options. 2. Network and volunteer One of the things to know as a job seeker is that Canada has a hidden job market. The hidden job market refers to positions that are filled without the employer advertising for it publicly. It is said that as much as 65-85 per cent of the jobs are not posted online. This is why networking is crucial to finding relevant opportunities – and LinkedIn is an excellent tool to get you started. You can use websites like Eventbrite and Meetup to locate industry-specific networking events near you. These events are excellent forums to find people from your field of work and strengthen your professional network. Giving back to the community (or volunteering) is usually well-regarded and valued in Canadian society. It can help you gain Canadian experience and learn the local culture and serves as a good way to meet other people and build your network. Tip: Volunteering can help you build your network and earn Canadian experience. To discover the importance of volunteering in Canada and learn how to find volunteering opportunities, read The benefits of volunteering as a newcomer in Canada. 3. Enrol with immigrant-serving organizations In Canada, there are various government-funded organizations such as ACCES Employment and COSTI that help newcomers find employment. Some are province and city-specific, so you can look up the government website to find one closest to you. These organizations help newcomers with a wide range of online and in-person career services such as resume building, interview preparation, language assessment, and finding a job. 4. Attend job fairs Many immigrant-serving organizations also organize job fairs. Some of these fairs are virtual and span a couple of days, while others are in-person events. Prepare for Canada, and JVS Toronto are organizations that do online job fairs periodically. One of the benefits of enrolling with a government-funded settlement organization is getting alerts for these job fairs. Following the social media channels for these organizations and browsing sites like Eventbrite and Meetup are also good ways to find upcoming job fairs. 5. Reach out to employment agencies and recruiters There are many employment agencies and specialized recruiters that can help you find a job in your field in Canada. These agencies and recruiters match jobseekers to employer positions. You can search for recruiters from your industry on sites like LinkedIn. Recruitment agencies in Canada may be nationally and/or internationally licensed. Those with a national license are only authorized to assist job seekers within Canada, while those with an international license can recruit overseas employees wanting to work in Canada. Who are the top recruitment agencies in Canada? Some popular employment agencies in Canada are Robert Half, Randstad Canada, and Hays Canada. Employment/recruitment/placement/staffing agencies cannot demand a fee from a jobseeker to help them find work. However, they can charge for additional services such as resume preparation, interview preparation, and job skills training. Tip: Beware of any employment agencies or recruiters asking you to pay a fee in exchange for a job offer, especially if you haven’t moved to Canada yet. Learn more about employment scams in Canada in the article, Common scams that newcomers to Canada should know about. 6. Browse career sections on company websites A good way to go about your job search is to make a list of organizations you would like to work at and then check the career sections on their respective websites. Most websites will let you send a job application for open positions directly through their site. Reach out to current or past employees through LinkedIn for a coffee chat to better understand the organizational structure and learn more about your desired role – this will also help you prepare for your interview. These conversations are also a great way to know about future job openings at the organization. Tip: Check out the list of top 100 employers in Canada and find organizations from your industry. 7. Enrol in bridging programs Bridging programs are designed for internationally-trained professionals and tradespeople who want to work in their field in Canada. They can help you get a licence or certification and integrate into the Canadian workplace. Some of the bridging programs’ services include courses, education and skills assessment, practical or workplace experience, exam preparation for licenses or certificates, language training, and action and learning plans to help you identify the training you may need. These programs may be virtual, or in-person or a combination of both. Usually, classroom training or work experience is part of the program. Depending on the bridging program you choose, there may be a fee associated with it. Contact a newcomer settlement agency near you or check local university or college websites to learn more about enrolment processes and eligibility criteria for specific bridging programs. 8. Look for a mentor Many Canadian professionals and industry leaders provide free advice and coaching to newcomers settling in Canada. This is a good way to learn how to adapt your skills and experience for the local job market and find relevant opportunities. You can look for a mentor through organizations like: Immigrant Services Association of Nova Scotia (ISANS) Calgary Region Immigrant Employment Council (CRIEC) Toronto Region Immigrant Employment Council (TRIEC) Edmonton Region Immigrant Employment Council (ERIEC) Ottawa Community Immigrant Services Organization (OCISO) How to position yourself as an ideal candidate and get a job offer The job market in Canada is competitive. Once you’ve identified a job position that’s a good fit for your skills and experience, it’s time to stand out from the crowd and market yourself as the ideal candidate. Positioning yourself as a strong candidate to an employer begins with building your personal brand. Here are a few other aspects to keep in mind as you prepare for a job application. Be confident and tell your story Practise responses to basic interview questions and have an elevator pitch so you’ll be more confident during the interview. Elevator pitches are a good way to introduce yourself and make an impression at the start of an interview. They can also serve as an answer to the “tell me about yourself” question. Think of your achievements and use specific examples or stories to demonstrate how you are a good fit for the role. Job interview resources: How to prepare for a job interview 10 common job interview questions and how to answer them The interview process in Canada may seem nerve-wracking. Prepped is an excellent resource for you to practise your interview skills and confidently prepare for the interview process. 6 Tips for improving your job search in the Canadian market 1. Customize your resume and add a cover letter A generic resume and cover letter sent to multiple employers may not yield much success in your job search journey. Be sure to customize your resume to each position that you’re applying for by tailoring your work experience, skills, and any additional information to the role. The cover letter is a good way to justify any gaps in your resume or provide any additional info that your resume can’t. Adding a custom, well-written cover letter to your resume can make you stand out from the competition, thus improving your chances of being approached for an interview. 2.Research the company and the role Be sure to research the company you are interviewing with – this will help you have more meaningful conversations with the employer and ask relevant questions. Look up the company mission, vision, some of its history, and market standing. Align your responses to the organization’s goals. Candid reviews on sites like Glassdoor can help you get insight into the operations and culture of the company. Get the names and titles of people who will be interviewing you and learn a bit about their background – this information can come in handy while making small talk with interviewers. Network with current or past employees through LinkedIn to learn more about the company and identify their needs – it will help you suggest potential solutions during the interview. 3. Polish your LinkedIn profile In Canada, it is common for employers and recruiters to search your name online. Brush up and polish your LinkedIn profile so that it’s up-to-date with your experience and qualifications. Also, ensure your social media or blogs don’t raise any red flags about you or portray you in a negative light. 4.For virtual interviews: Check your connectivity and surrounding environment With the coronavirus pandemic, many organizations have their employees working remotely. There is also a growing trend of candidates being interviewed virtually or over the phone. With this new setup, it is essential to showcase soft skills such as self-motivation and communication and demonstrate your comfort level using technology to connect. Be sure to check your phone reception, internet bandwidth and hardware or software requirements to ensure a smooth audio/video call for your interview. Avoid taking such calls from a coffee shop or a place where background noise levels may be high. 5.Be punctual and dress for the job you want Whether it’s a virtual or an in-person interview, make sure you’re punctual and dress for the job you want. For in-person interviews, plan your journey beforehand and consider the traffic and weather conditions. With the dress code, you can never go wrong with formals – this applies to in-person as well as virtual interviews. 6.Follow-up after the interview After the interview, take the time to send a thank you note to each of your interviewers. While this reflects your enthusiasm for the position, it also ensures the interviewer remembers you while deciding whom to hire. Finding meaningful employment in Canada can take anywhere from a few weeks to a few months. Preparation, persistence, determination, a positive attitude, and access to the right resources will help you find relevant opportunities. Original article located here, published by Arrive.
Canadian finances 101: What you should know as a newcomer
Canada’s financial ecosystem is made up of banks, credit unions, trusts, and other financial and insurance companies and it is considered to be one of the most sound and safest in the world. According to the Global Competitiveness Report 2019, published by the World Economic Forum, Canada ranked 9th globally for its financial system, showcasing stability and reliability. As you plan your move, familiarizing yourself with the Canadian banking and financial landscape can help provide context to key tasks like opening bank accounts, building credit history, borrowing money, and filing taxes. In this article: Types of financial institutions in Canada Getting started with taxes: The Canada Revenue Agency (CRA) Canada: A credit-based economy Banking, investments, and money transfers What are the types of financial institutions in Canada? Financial institutions in Canada can be classified into three main categories: 1. Banking institutions These are places where you can deposit, withdraw and borrow money. Examples of such institutions include banks, online-only banks, credit unions, trust companies, mortgage companies, etc. Banks A bank is licensed to receive deposits and make loans. Most banks are managed by the national government. The five largest banks in Canada are often referred to as the “big five” in banking. They are: Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO), and Canadian Imperial Bank of Commerce (CIBC). Sometimes, you may hear the term “big six,” including the National Bank of Canada – although, note that its operations are primarily focused in the provinces of Quebec and New Brunswick. Digital-only banks In addition to these banks, there are a few digital-only banks, such as Tangerine (a subsidiary of Scotiabank), Simplii Financial (a subsidiary of CIBC), and EQ Bank. They provide all services online only and do not have any physical branches. Credit unions A credit union is a smaller financial institution that is owned by its members, who are also typically account holders. They operate under provincial legislation and regulations and provide similar services as banks. The main difference between a credit union and a bank is their structure; credit unions are owned by anyone with money in the credit union. The operations are supervised by a democratically elected board of directors made up of local community members. Due to their scale of operations, note that credit unions may have fewer branches and ATMs than a big bank would. Tip: As a newcomer to Canada, you can choose any financial institution of your choice. However, it is helpful to know that the big five banks (like RBC) have newcomer banking packages that specifically cater to permanent residents and international students and are thus better positioned to assist you in your unique situation. Trust companies Trust companies are legal entities similar to banks that act as an agent (on behalf of a person or business) for the purpose of administration, management and the eventual transfer of assets to a party. Mortgage companies Money lending entities such as mortgage finance companies (MFCs) and mortgage investment corporations (MICs) provide real estate financing. MFCs are non-depository financial institutions that underwrite and administer mortgages sourced through brokers. Their lending is funded mainly through securitization or direct sales to third parties, primarily the big six banks. MICs and other private investors typically deal in uninsured, customized mortgage products that are not available through traditional channels. These products include non-prime loans, second mortgages and very short-term mortgages. Key financial authority: The Bank of Canada The Bank of Canada is the nation’s central bank. Its principal role is to promote the economic and financial welfare of Canada. The Bank influences the supply of money circulating in the economy, using its monetary policy framework to keep inflation low and stable. It promotes safe, sound and efficient financial systems, within Canada and internationally, and conducts transactions in financial markets in support of these objectives. Additionally, the Bank of Canada also designs, issues and distributes Canada’s bank notes and acts as the “fiscal agent” for the government of Canada, managing its public debt programs and foreign exchange reserves. It also sets the interest rates in Canada. 2. Insurance companies These are entities that sell insurance to cover the risk of loss in various situations, caused due to a variety of factors. They include homeowner or renter’s insurance, health insurance, car insurance, life insurance, and more. They compensate you for any loss that’s covered by your insurance policy. Once you purchase a specific type of insurance, you are required to make periodic payments, called premiums, to the insurance company to avail of the agreed-upon coverage. 3. Investment companies These are organizations that focus on investing, administering or managing funds or money on behalf of other persons. Examples of such companies are investment banks, hedge funds, underwriters, and brokerage firms. Note: There might be an overlap in the services provided by financial institutions. For instance, a leading bank like RBC offers banking services, mortgages, a wide variety of insurance options, investment solutions, and more. Tip: Beware of predatory lenders offering payday, instalment, and other types of loans with very high interest rates. These lenders often prey upon people who need cash quickly and who have run out of all other options. They usually have exorbitant interest rates, confusing and misleading representations, and a lack of transparency and documentation. Therefore, always double-check money lending claims that seem too good to be true. Note that payday loans are provincially regulated while instalment loans are unregulated. What this means is – while interest rates cannot exceed 60 per cent, lenders are effectively free to change terms and add fees and other charges almost at will. Getting started with taxes: The Canada Revenue Agency (CRA) The CRA administers tax laws for the Government of Canada and for most provinces and territories. It administers various social and economic benefit and incentive programs delivered through the tax system. The CRA website is the go-to place for everything related to your taxes: filing annual tax returns, checking receipt of Government benefits and subsidies, viewing tax documents, etc. Important: To register for CRA’s “My Account,” you must have filed a tax return for the current or a previous year. Download Arrive’s free tax guide for newcomers for insights on how to file your taxes and to make sure you’re prepared to manage the expectations that come with paying taxes in Canada. Note: Beware of a long-running CRA scam with callers posing as representatives of the CRA. The CRA will never use threatening language nor ask for information about your passport, health card, driver’s license, or demand immediate payment by Interac e-transfer, bitcoin, prepaid credit cards or gift cards from retailers such as iTunes, Amazon. Canada: A credit-based economy North American countries such as the U.S. and Canada are known to be credit-based economies. This essentially means that most people use their credit cards (instead of debit cards or using cash) to make purchases and then repay the entire amount owed either at the end of their credit card billing cycle or in installments. You will need to build your own credit history, since this is essential to many aspects of life in Canada. Once you receive your first credit card, start by making payments for small expenses such as phone bills or groceries, and be sure you pay the balance in full by the end of the billing cycle. Tip: Keep in mind that credit cards have limits and do not offer free money. They can carry very high-interest rates, so your balance should be managed and paid down promptly – this will help you maintain a good credit rating. A credit score is a way for financial institutions to measure your ability to repay loans. Some scenarios where you may be asked for a credit report are while renting accommodation, applying to certain jobs, and obtaining mortgages or other loans from the bank. Additional resources Download Arrive’s free Credit guide to learn more about credit cards, credit scores, and credit ratings in Canada. For tips on staying debt-free and building your credit history in Canada, read How to build a good credit score from scratch as a newcomer. Banking, investments, and money transfers in Canada Banking Like many other countries, in Canada, you can conduct all your banking and money transfer transactions by walking into a branch or online, through internet banking. See How to open a bank account in Canada as a newcomer to know the process of opening a newcomer account. The article will also provide tips and resources to help you learn more about credit and direct deposits. Investments There are many financial products available to save and invest your money in Canada. They can be broadly classified into savings accounts, registered savings plans and investment products. Depending on your goals and your appetite for risk, you can choose one or a combination of several of these. Read Savings and investments for newcomers in Canada for deeper insights into all available investment products. Money transfers For domestic peer-to-peer payments (think: sending money to a friend, relative, co-worker, or acquaintance in Canada), there are a couple of ways to send and receive money online: Interac and Paypal. Interac is a bank-based tool, while Paypal is a non-bank, third party service. Among these, Interac e-transfers are the most popular and widely used form of peer-to-peer payments in Canada. You can send money overseas through online or mobile banking, by telephone, by email, or in-person. Banks like RBC have a simplified, affordable, and convenient process for international money transfer through online banking. If you have the recipient’s banking information handy, all it takes is a few clicks! Some popular options for international remittances are: Banks Credit unions Money transfer operators like Western Union, MoneyGram, WorldRemit, etc. Peer-to-peer transfer providers such as Transferwise (now, Wise), CurrencyFair, Paypal, etc. Currency exchange businesses When sending money overseas, the Canadian federal government tracks large sums (over $10,000 CAD) through Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to prevent money-laundering, terrorism funding, and related crimes. Understanding financial products and regulatory agencies in Canada can make you feel overwhelmed. Start with the basics so you can build awareness and a strong foundation to manage your finances in Canada. Original article located here, published by Arrive.
Aston University secures £2.2m grant to reduce carbon footprint
“The projects that we are investing in at Aston University are expected to save in the region of 2.2 million kWh annually, which will save around 430 tonnes of carbon dioxide equivalent.” Andrew Bryers, Sustainability Manager Aston University £2.2m funding awarded to Aston University by Phase 2 Public Sector Decarbonisation Scheme Public sector being supported in taking a whole building approach to decarbonisation Aston University projects will save around 430 tonnes of carbon dioxide equivalent Aston University has been successful in its bid for a government grant of over £2 million to reduce its carbon emissions. The £2.2m funding has been awarded by the Phase 2 Public Sector Decarbonisation Scheme (PSDS) managed on behalf of the Department of Business, Energy and Industrial Strategy (BEIS) by delivery partner Salix Finance. The scheme supports the public sector in taking a 'whole building' approach to decarbonising their estates. It puts the sector at the forefront of decarbonising buildings in the UK, placing it in a leadership role to create exemplar projects in communities that pave the way to help the country meet its carbon budgets and net zero commitments. The grant funding secured by Aston University will be invested in a variety of carbon reduction projects including: Andrew Bryers, sustainability manager at Aston University, said: “One of the greatest challenges today in meeting the UK’s 2050 net zero target is decarbonising the way buildings are heated. In fact, most of the buildings in the public sector still rely on fossil fuel-based heating and as these heating systems approach the end of their working lives it is an ideal opportunity to transition to low carbon heating.” “The projects that we are investing in at Aston University are expected to save in the region of 2.2 million kWh annually, which will save around 430 tonnes of carbon dioxide equivalent.”
Climate Change-Related Natural Disasters Impact Short-Lived Assets and Interest Rates
For decades, scientists across the globe have warned about the effects of climate change. Given that these changes—global warming, rising sea levels—happen over time and that their disastrous results may not be obvious for decades, studying the effects of climate change on financial markets has posed a problem. According to Christoph Herpfer, assistant professor of finance, Goizueta Business School, most of the existing literature that deals with the effect of climate change on financial markets considers “indefinitely lived assets,” such as owning stock or owning a home—assets that “don’t have an expiration date,” explained Herpfer. To evaluate the effect of climate change in the long run on these assets then requires discount models—ways to value something today based on what it could be worth decades from now. Herpfer, a banking and corporate finance specialist, studies short-lived assets that, on average, expire after 4.5 years. Herpfer wondered if there could be “an alternative channel in which climate change already impacts companies today,” he explained. One that didn’t have to deal with all the “challenges associated with long run discount rates,” he added. In “The rising tide lifts some interest rates: climate change, natural disasters, and loan pricing,” Herpfer and his colleagues—Ricardo Correa, deputy associate director, Board of Governors of the Federal Reserve System, Ai He, assistant professor of finance, University of South Carolina, and Ugur Lel, associate professor, Nalley Distinguished Chair in Finance, University of Georgia, Terry College of Business—consider this question by studying corporate borrowing costs. In 2020, the paper received the best paper award at the Boca Corporate Finance and Governance Conference. The foursome had a novel idea: In recent years, there has been scientific consensus that climate change fuels natural disasters. So Herpfer and his fellow authors wondered if financial institutions took climate change-amplified natural disasters into account when pricing short-term loans. Their answer was, unequivocally, “yes.” Their work and research is captured in a recent article in Emory Business - it's attached and well worth the read. If you're a journalist looking to know more - then let us help. Christoph Herpfer is an assistant professor of finance at Goizueta Business School. He is also a financial economist working at the intersection of banking, law, and accounting. Christoph is available to speak with media about this research - simply click on his icon now to arrange an interview today.
Kelley expert available to discuss Bernard Madoff's legacy, long-term effect of his scheme
Bernard “Bernie” Madoff, convicted architect of an infamous and epic securities Ponzi scheme with thousands of investors, died behind bars on April 14 at the age of 82. Noah Stoffman, an associate professor of finance and Weimer Faculty Fellow at the Indiana Kelley School of Business, has researched the effect of such fraud beyond the direct investments that were lost by victims. His 2018 paper, “Trust Busting: The Effect of Fraud on Investor Behavior,” co-authored with professors at Cornell University and the University of Texas-Dallas, showed that the collapse of the Madoff Ponzi scheme had an effect not only on his many direct victims, but also on the general level of trust in financial services. “People who live in the same areas as victims of the fraud withdrew assets from investment advisers and increased their deposits in banks. Financial advisers in these areas were also more likely to close. Our analysis shows that advisers who provided services that can build trust—such as financial planning advice—saw lower levels of withdrawals. Our evidence suggests that this decline in trust shock was transmitted through social networks,” Stoffman said. Stoffman’s research focuses on the investment decisions of professional money managers and individual investors, and on the effect of technological innovation on asset prices. Much of his work highlights the importance of social interaction in the spread of information in financial markets. Stoffman teaches courses on analysis of financial data to undergraduates, MBAs, and doctoral students at the Kelley School. He can be reached at 812-955-1758 (m) or nstoffma@indiana.edu.
Is This Bitcoin's Time to Shine?
Bitcoin was invented in 2008 and launched in 2009, but after years of skepticism, it's finally becoming a part of mainstream conversation. The cryptocurrency's value has continued to rise since 2017, but with the start of 2021, its price has surged and many more companies are looking for ways to get involved. Tesla and Square have invested. (You can even buy a Tesla with bitcoins.) Goldman Sachs and JPMorgan are exploring ways to meet customer demand for cryptocurrency investment. A National Football League player converted half of his salary into bitcoins. And Major League Baseball's Oakland Athletics are offering a suite for the 2021 season at the price of one bitcoin. So, if it's been around for so long, why are we only seeing this mainstream push now? "I think the Bitcoin ecosystem is developing to the point where people can start to think about using it as a currency," said John Sedunov, PhD, an associate professor of finance who studies Bitcoin. "However, the price still remains volatile, and it isn't clear that the currency can maintain its current $50,00-to-60,000 value." While there are companies adopting and investing now, this will still be a gradual process, Dr. Sedunov says. "As businesses become better able to accept the currency, and perhaps more importantly better able to withstand and manage the volatility of Bitcoin, then the currency will become more widespread in its use. The process would be expedited if the entire supply chain accepted Bitcoin, rather than just the retailer and the end of the chain. This would smooth the process and allow people to utilize the currency without as much concern for converting it." Additionally, Dr. Sedunov notes that there needs to be a continued evolution of the ability of firms to accept and manage the currency, in addition to a reduction in the volatility of the currency. Smaller businesses may be at much more of a risk than large corporations and banks if there is price instability. But the value of Bitcoin won't be this high forever. As the country and economy continue to deal with the impact of the pandemic, there are growing concerns that inflation could be next, pushing consumers to other options, like cryptocurrency. "When the pandemic ends and there is, perhaps, more economic stability, Bitcoin's value will wane a bit, but I don't think it will fade to nothing," Sedunov notes. "The big question mark, to me, is the U.S. Dollar and inflation. Inflation expectations are rising, and this only pushes people more toward alternatives. If this trend continues, then perhaps economic stability will be a bit lower, and more people will flock toward Bitcoin."
IU Kelley School finance expert available to discuss GameStop, Robinhood
Charles Trzcinka, the James and Virginia Cozad Chair of Finance at the Indiana University Kelley School of Business and an expert on financial markets and investments, is closely following developments involving individual investors and Game Stop and available to talk with reporters. He can discuss the impact of retail investors using the popular Robinhood brokerage and Reddit’s “Wall Street Bets” page on the stock of low priced companies like Gamestop, AMC and stocks such as BlackBerry, Bed Bath and Beyond and Nokia. Several brokerages halt buying of those and other stocks on Thursday. Trzcinka teaches behavioral finance and is familiar with Robinhood's model is to use game technology to trade stock and how it makes money by selling the right to trade against the orders to hedge funds and high frequency traders. In order to schedule an interview, contact George Vlahakis, associate director of communications and media relations at the Kelley School, at vlahakis@iu.edu or 812-855-0846.
Heads up CFOs: The capital asset pricing model still rules
Firms invest in various things: bonds, stocks or other assets—new stores, new premises or even other firms. And they do so to earn maximum value from available cash that would otherwise be idle. For example, for the last five years Walmart generated an annual cash flow of more than $25 billion from its operations. The retailer has the option to channel this cash into opening new stores, ultimately growing its business and profits. Alternatively, Walmart can pay the cash out to its shareholders in the form of dividends, or through share repurchases. So far, it’s been productive. However, this win-win scenario is contingent on successfully navigating a number of complexities. Primary among these is that to invest optimally, you first need to determine the correct hurdle rate for that investment. Hurdle rates are the minimum rates of return that firms seek on their investments. The hurdle rate is the appropriate compensation commensurate with the investments’ risk. Therefore, the higher the risk, the higher the hurdle rate needs to be. For instance, a hurdle rate of 10% means that for every $100 invested, you would expect to earn an average of $10 average per year. But it’s tricky. You have to calculate the right hurdle rate that would add the most value for your shareholders—the optimal rate of return for you and your business. Too high and there’s risk of missing out on a good investment. If your right hurdle rate is 10%, but you mistakenly opt for 15%, you’re likely to ignore any investment that is projected to earn you less than 15%, but more than 10% is likely to be missed. As a result, you’ll end up leaving money on the table. Too low a hurdle rate and you’re in danger of burning money. Again, supposing your hurdle rate should be 10%, but you set it at 5%, you’re likely to end up investing in things with a suboptimal return. In the end, you’re wasting your cash on low value investments when you could be paying it directly to your shareholders in dividends and giving them the chance to earn 10% return on their own. For the last 50 years, the financial world has built models to calculate hurdle rates and rates of return. But which one works best? Shedding critical new light on this is a recently published paper by Narasimhan Jegadeesh, Dean’s Distinguished Chair of Finance at Goizueta, entitled “Empirical tests of asset pricing models with individual assets.” Jegadeesh and his co-authors developed new statistical methods to differentiate among a raft of new models that have been developed in recent years and to compare their efficacy to that of the Capital Asset Pricing Model (CAPM), a model introduced in the 1960s. What they found is that none of the newer models work any better than the CAPM in determining the appropriate hurdle rate or rate of return of an asset. That paper is attached and is required reading for CFOs and anyone interested in the Capital Asset Pricing Model. If you are looking to know more, or if you are a journalist interested in covering this important aspect of business and investing – then let our experts help. Narasimhan Jegadeesh is Dean’s Distinguished Chair of Finance at Goizueta. He is a renowned expert in this field and has been published extensively in the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies and other leading academic finance journals. His research has been discussed in several publications including Businessweek, The Economist, Forbes, Kiplinger's Personal Investments, Money, New York Times, and Smart Money.
