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. Capital Expenditure - CAPEX

    Funds used by a company to acquire or upgrade physical assets ...
  4. Venture Capital Funds

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

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

    The act of placing restrictions on the amount of new investments ...
Related Articles
  1. thinkstock|istock
    Economics

    What Is Fiscal Policy?

  2. Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

  3. Investing

    Spotting Cash Cows

  4. Investing

    Earnings Cyclicality Exposes Profitable ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center