£10.00 per hour plus £1.21 holiday pay
28 Apr 2021

Role & Department Overview

R&D Internship Work Package 3: Econometric forecasting of general financial variables (interest rates and inflation) as well as construction- and real-estate sector price inflation 10 years into the future and beyond, incorporating demographic and globalisation trends.

Cambridge & Counties Bank (CCB) is a UK bank that specialises in providing lending and deposit products for Small and Medium Enterprises (SMEs). The Bank lends to experienced commercial and residential property investors as well as to owner occupied businesses to invest in their own commercial premises. CCB recognises it needs to embed climate change risk across all its operations, especially with regard to credit risk management and its Credit Grading Model, which it uses to assess loan applications.

Through a collaboration between Lancaster University Management School (LUMS) and Faculty for Science & Technology (FST), CCB are providing three paid internships (to be run alongside one another) to help them develop their understanding of how climate change could impact the bank’s business. The internships are as follows:

  1. Develop retrofit menus needed to increase the energy efficiency of the building types found in CCB’s portfolio to specific energy performance levels.
  2. Analysis and forecasting of real estate energy performance regulation pathways to the 2050 net-zero target.
  3. Econometric forecasting of general financial variables (interest rates and inflation) as well as construction- and real-estate sector price inflation 10 years into the future and beyond, incorporating demographic and globalisation trends.

This opportunity is for Internship 3.

Application Closing Date: Wednesday 28th April
Interview Date: w/b Tuesday 4th May
Job Start Date: Mid-May (TBC)
Job End Date: Friday 27th August (estimated – potential for work to extend beyond this date)
Working Pattern: 15-20 hours per week on average
Pay Rate: £10 per hour, plus holiday pay.

To apply, please see instructions after the Person Specification below.

Job Description

This R&D internship will develop forecasts for interest rates and inflation. It is not at all obvious that the current low levels of inflation and interest rates will persist. Given slow-moving but predictable demographic changes over the coming 10-20 years, it is foreseeable that the working-age population will shrink, the dependency ratio will increase, and the extent to which globalisation can mitigate these trends will be limited (see e.g. Goodhart, Pradhan (2020) The Great Demographic Reversal: Ageing, Societies, Waning Inequality, and an Inflation Revival. Palgrave Macmillan.).

It is clear that substantial increases in interest rates would affect the viability of major energy-efficiency retrofits – there is an interaction between the inflation/interest rate environment and the evaluation of major energy-efficiency retrofits. Hence forecasts are needed not only for interest rates and general inflation, but inflation forecasts are needed for different categories of rents/lease rates (i.e. those relevant to CCB’s portfolio) as well as for the cost of the different categories of retrofits identified in work package 1. The work will involve:

  • An Induction by CCB covering: CCB’s property portfolio; the data the company holds on the buildings in its portfolio; and the company’s existing Credit Grading Model.
  • An introduction to the CRREM tool by Dr. Kim Kaivanto, Senior Lecturer (MSc Money, Banking & Finance) in Economics at Lancaster University Management School
  • As the project’s ‘quant’, analysis of the CRREM spreadsheet tool, to understand how the results of work packages 1, 2, and 3 may be incorporated.
  • Development of econometric forecasts for interest rates and inflation over the short, medium and long terms.
  • The incorporation of the effects of predictable demographic and globalisation developments into the forecasts (see e.g. Goodhart & Pradhan (2020)).
  • Development of sectoral and product-category-specific inflation forecasts (rents/lease rates, energy-efficiency retrofit materials, construction labour).
  • Report containing analysis, findings, and recommendations.
  • Modification of the CRREM spreadsheet tool to enable integration of key horizon-dependent variables and forecasts from work packages 1, 2, and 3. https://www.crrem.eu/.
  • Integration of the inflation and interest-rate forecasts into the CRREM spreadsheet tool.
  • Support the incorporation of the results of work packages 1 & 2 into the CRREM spreadsheet tool.

There is also the potential for a follow-on project for augmenting CCB’s credit scoring model with climate change ‘physical’ and ‘transition’ risks.

Person Specification

Key Skills/Knowledge Required

To be successful in this role, you will need:

  • Competence in the development, estimation and testing of econometric forecasting models using software available in the Economics Department (eviews, stata, r).
  • Familiarity with the use and development (e.g. macros) of spreadsheet tools
  • Excellent communication skills
  • Excellent teamworking skills (as the work will be carried out alongside two other complementary internships)
  • Accurate and clear written skills when producing reports
  • Strong organisational skills.

Skills Developed

Working in this role will help to develop the following skills and experience:

  • Quantitative analysis
  • Time-series econometrics and forecasting
  • Spreadsheet modelling
  • Business development and commercial awareness
  • Knowledge sharing
  • Teamworking
  • Multi-tasking
  • Planning and organising
  • Problem solving
  • Research
  • Written and verbal communication.

To meet COVID restrictions this is a remote working internship, expected to start mid-May. Research organised around course requirements with a weekly online project contact meeting. Dr. Kim Kaivanto and the company partner will provide ongoing communication and support.

Due to commercial data considerations, applicants must be resident in the UK.

If you are interested in applying, please submit a cover letter (2 pages A4 max) describing why you are interested in this role and the key skillsets you will bring to the role and email to Simon Hallam (s.hallam1@lancaster.ac.uk) by Wednesday 28th April.

If you have any questions about the role please contact Dr. Kim Kaivanto of LUMS (k.kaivanto@lancaster.ac.uk) or Andy Tovey, Head of Credit Risk Monitoring & Control at CCB (Andy.Tovey@ccbank.co.uk).

 
 
 
 
 

You are required to submit a cover letter to support your application. Applications without a cover letter will not be considered.

Under the terms of this work, we endeavour to provide the advertised number of hours however, hours are not guaranteed and that work may cease if there is a fall in demand.

Adverts that display a closing date should be treated as a guide. We reserve the right to close the vacancy once we have received sufficient applications, so we advise you to submit your application as early as possible to prevent disappointment.

Help and advice on making applications can be found on the Lancaster University Careers pages. Visit www.lancaster.ac.uk/careers.