Capital Outflow

AAA

DEFINITION of 'Capital Outflow'

The movement of assets out of a country. Capital outflow is considered undesirable and results from political or economic instability. It occurs when foreign and domestic investors sell off their assets in a particular country because they no longer perceive it as a safe investment. The capital is withdrawn from the country (flows out) and may end up in another country or back in the investor's home country.

INVESTOPEDIA EXPLAINS 'Capital Outflow'

Some countries implement capital controls to curb capital outflows. These controls are not really a solution because they can scare off investors who want control over their assets and can give the impression that something is wrong with the country's economy or government that is not yet widely known.

RELATED TERMS
  1. Capital Flight

    A large-scale exodus of financial assets and capital from a nation ...
  2. Current Account Deficit

    A measurement of a country’s trade in which the value of goods ...
  3. Capital

    1) Financial assets or the financial value of assets, such as ...
  4. Economic Capital

    The amount of capital that a firm, usually in financial services, ...
  5. Currency

    A generally accepted form of money, including coins and paper ...
  6. Asset

    1. A resource with economic value that an individual, corporation ...
Related Articles
  1. Insurance

    Working Capital Works

    A company's efficiency, financial strength and cash-flow health show in its management of working capital.
  2. Forex Fundamentals

    What Causes A Currency Crisis?

    Find out what can cause a currency to collapse, and what central banks can do to help.
  3. Forex Education

    Dual And Multiple Exchange Rates 101

    Why would a country choose to implement dual or multiple exchange rates? It's risky, but it can work.
  4. Investing

    Can Europe’s QE Be A Stimulus For U.S. Investors?

    Finding value in today’s markets has been difficult, so many investors are turning to opportunities outside of the U.S. But where should they look?
  5. Economics

    10 Countries With The Biggest Forex Reserves

    Without adequate reserves, a nation's economy can grind to a halt. Here are the 10 nations with the biggest forex reserves.
  6. Economics

    What Is The Labor Market Conundrum?

    We are facing a conundrum with investment implications: Why are wages still stagnant, when jobs are being created at the fastest pace since the late 90's?
  7. Economics

    Understanding Impairment

    In finance and accounting, impairment refers to the loss of value of a company’s capital stock.
  8. Economics

    What is a Promissory Note?

    A written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.
  9. Chart Advisor

    Is Now the Time to Invest in North America?

    Bullish chart patterns across the North American markets suggest that now might actually be a wise time to allocate closer to home.
  10. Investing

    How To Trade Foreign Stocks

    We weigh the major ways to trade foreign stocks for investors.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center