Bank Endorsement - Definition
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What is a Bank Endorsement?
A bank endorsement is a bank's authorization on a negotiable instrument. The instrument is generally created by the bank's customer and is payable to the holder. This endorsement stipulates that the bank will stand by the obligations of the negotiable instrument as created. If the maker of the instrument does not pay the not when appropriately presented, the bank will pay the not. Examples of negotiable instruments covered by bank endorsement include check, banknotes (dollar bills or pound notes), promissory notes, demand drafts, certificates of deposits and bills of exchange.
Bank endorsements are commonly used in international trade where a party authorizes payment to another party that is unknown. There are two types of bank endorsements, they are banker's acceptance and time draft.
Academic research on Bank Endorsement
- Commercal Paper, Bank Deposits and Collections, and Commercial Electronic Fund Transfers, Miller, F. H., Ballen, R. G., & Scott, H. S. (1983). Bus. Law.,39, 1333.
- The endorsement effects of corporate venture capital in the creation of public companies, Ginsberg, A., Hasan, I., & Tucci, C. L. (2005). (No. CSI-WORKING-2005-004). Empirical research on the certification role of venture capital investment in initial public offerings (IPOs) tends to ignore how variant attributes and contexts might affect the benefits of affiliation received by a young firm undergoing an IPO. In this paper we argue that because corporate venture capital (CVC) and independent venture capital (IVC) investors possess different types of expertise and investment orientations, they provide different confidence-building signals to investors of newly public firms. Analysis of 1830 initial public offerings during 1990-1999 showed that CVC investment sends a different signal of quality than IVC investment, as reflected in the extent to which the offer price is lower than the market price at the end of the first day of trading than it would be with IVC investment alone. This effect is particularly pronounced when the corporate investor is a bank, or in the same industry as the IPO, and when equity markets are hot. We also found that this effect decreases at an escalating rate when the corporate investors portfolio becomes larger. Our results confirm the premise that corporations, banks and independent venture capitalists play different endorsement roles in the creation of public companies, and that the value of CVC endorsements depends on key attributes of the CVC and the type of market uncertainty that dominates IPO investors concerns.
- The impact of bank ownership of underwriters on the underpricing of initial public offerings, Ursel, N. D., & Ljucovic, P. (1998). Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l'Administration,15(1), 17-27. This study examines the underpricing of Canadian initial public offerings (IPOs) since July 1, 1987, when banks entered the underwriting business. The level of underpricing found (3.64%3.95%) is much lower than that found by other studies. Bank ownership of an issue's underwriter is found to be significantly related to lower underpricing. However, this appears to be due to the fact that banks acquire high prestige underwriters and not due to bank ownership per se.
- Endorsement and Negotiation of Government Warrants, Iverson, P. E. (1962). Utah L. Rev.,8, 28.
- Simple certified e-check with a partial PKI solution, Hsin, W. J., & Harn, L. (2005, March). InProceedings of the 43rd annual Southeast regional conference-Volume 2(pp. 185-190). ACM. In this paper, we propose a simple certified e-check scheme. It is simple because no full PKI setup is needed by the e-check users. Additionally, it provides privacy and flexibility that are not in the current certified e-check scheme. Furthermore, it can be easily implemented on top of the existing Internet banking systems without additional cost. With this simple solution, we hope that the e-check will gain wide acceptance among the general population.
- A Non-Negotiable Crossing, Baxter, I. F. (1982). Can. Bus. LJ,7, 141.