Financial crises trigger massive capital flight, impacting global economies.
The study looks at how money moves between countries during good times and bad. They found that when foreigners invest in a country, locals tend to invest abroad, and vice versa. During economic booms, foreigners invest more in a country, while locals invest more abroad. But during crises, both foreigners and locals pull back on investing. This shows that different factors affect how money flows between countries, like the risk of a country not paying back its debts.