What is the capital flight?

Capital years concern the transfer of money from domestic investment and bank accounts and to accounts and investment opportunities in other countries. The capital flight usually occurs for two different reasons and may be a temporary strategy or a long -term approach to asset management. When the economic trend appears to be settled and carried out long -term shifts that the investor does not consider desirable, it may decide to consider moving assets to a more stable investment environment. This strategy of moving money will ensure that the total value of the investment portfolio has at least a good chance to maintain the current value and perhaps recognize over time.

Another reason for the flight of capital is the desire to diversify the type of investment that forms the financial portfolio. The investor may decide to avert resources previously used in domestic investment to take advantage of what seems to be an opportunity with a high yield that is based in another ofme. In this scenario, the decision to move funds from the domestic market has nothing to do with predicting any economic questions with the market in the country of stay. This type of capital flight is more likely to be a temporary phenomenon. As soon as the international investment brought a return and began to balance, the investor most likely sells his shares and returns these funds to home investment.

The long -term flight of capital is almost always due to the emergence of factors that shake the investor's confidence in the domestic economy. Inflation is one of the examples of economic conditions that can lead to investors to implement a capital flight. If the economic conditions are assumed to remain unsatisfiedInvestor is much more likely to lose interest in leaving international investments and back to domestic investments. In the short -term flight of capital, however, the investor decides to avert resources back to the country as soon as the financial crisis passes.