Capital Flows

AAA

DEFINITION of 'Capital Flows'

The movement of money for the purpose of investment, trade or business production. Capital flows occur within corporations in the form of investment capital and capital spending on operations and research & development. On a larger scale, governments direct capital flows from tax receipts into programs and operations, and through trade with other nations and currencies. Individual investors direct savings and investment capital into securities like stocks, bonds and mutual funds.

INVESTOPEDIA EXPLAINS 'Capital Flows'

Capital flows are aggregated by the U.S. government and other organizations for the purpose of analysis, regulation and legislative efforts. Different sets of capital flows that are often studied include the following:

• Asset-class movements – measured as capital flows between cash, stocks, bonds, etc.
• Venture capital – investments in startup businesses
• Mutual fund flows – net cash additions or withdrawals from broad classes of funds
• Capital-spending budgets – examined at corporations as a sign of growth plans
• Federal budget – government spending plans

Capital flows can help to show the relative strength or weakness of capital markets, especially in contained environments like the stock market or the federal budget. Investors also look at the growth rate of certain capital flows, like venture capital and capital spending, to find any trends that might indicate future investment opportunities or risks.

RELATED TERMS
  1. Capital Markets

    Markets for buying and selling equity and debt instruments. . ...
  2. Capital Outflow

    The movement of assets out of a country. Capital outflow is considered ...
  3. Venture Capital Funds

    An investment fund that manages money from investors seeking ...
  4. Money Supply

    The entire stock of currency and other liquid instruments in ...
  5. Capital Rationing

    The act of placing restrictions on the amount of new investments ...
  6. Capital Expenditure - CAPEX

    Funds used by a company to acquire or upgrade physical assets ...
Related Articles
  1. What Is Fiscal Policy?
    Economics

    What Is Fiscal Policy?

  2. Taking Stock Of Discounted Cash Flow
    Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

  3. Spotting Cash Cows
    Investing

    Spotting Cash Cows

  4. Earnings Cyclicality Exposes Profitable ...
    Investing

    Earnings Cyclicality Exposes Profitable ...

comments powered by Disqus
Hot Definitions
  1. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  2. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  3. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  6. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
Trading Center