Banker's acceptance
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Banker's acceptance is a promise of an importer's bank promises to accept a postdated check written to an exporter even if there are insufficient funds in the importer's account. If the bank is strong, then this financial instrument virtually eliminates credit risk.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Banker's acceptance. Created when an importer's bank promises to accept a postdated check written to an exporter even if there are insufficient funds in the importer's account. If the bank is strong, then this financial instrument virtually eliminates credit risk.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
