Capital flows are the international movements of money and capital. Investigating global capital flows provides valuable evidence of international capital markets. Globalization has created a friendly atmosphere for the global economy. In particular, the increase of cross-border capital flows brought countries with a deficit balance as good as economically regulated.
With full free movement of capital, large amounts of money move without delay and without transaction costs across borders. They can be transformed into any investment opportunity to achieve the highest profit and lowest credit costs. Capital flows exist for as long as interest rates inland and abroad correspond. In case of an imperfect capital mobility, there may be different interest rates in different countries.
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