Acceptance Market (Finance) Definition
An acceptance market is an agreement between parties which is based on short-term products. An acceptance market is a short-term credit investment between parties, usually non-financial firms who are backed by a bank to make payment. It is used in inter-country or international trade.
It is an agreement to pay an amount of money at a specific date after a service has been done or goods supplied. Acceptance markets are often contractual agreements guaranteed by a bank stating that a party would pay the amount due at a particular date. Exporters who prefer paying for exports faster also use short-term credit products.
A Little More on What is an Acceptance Market
An acceptance is a contractual agreement which reflects the intention and willingness to pay an exporter at a specified date. If is a short-term credit method guaranteed by a bank that can be used in international trade. In financial and market arrangements, an acceptance is received as payment for goods, it is often in the form of a receipt or an invoice.
The buyer signs the acceptance which states the date that an amount will be paid to the exporter. The buyer is expected to make a payment on the agreed date. However, should the buyer who already signed the acceptance return the invoice to the exporter, it can be sold to the bank. Sellers (exporters) benefit from acceptances, for instance, even if the buyer does not receive the goods, the seller receives payment for the goods sold.
References for Acceptance Market
Academic Research on Acceptance Market
Recent developments in the bankers acceptance market, Jensen, F. H., & Parkinson, P. M. (1986). Fed. Res. Bull., 72, 1.
The impact of financial futures on the cash market for Treasury bills, Simpson, W. G., & Ireland, T. C. (1985). Journal of Financial and Quantitative Analysis, 20(3), 371-379.
The international acceptance market, Baster, A. S. J. (1937). The American Economic Review, 294-304.
Correlates of credit card acceptance and usage in an advanced developing Middle Eastern country, Kaynak, E., Kucukemiroglu, O., & Ozmen, A. (1995). Journal of Services Marketing, 9(4), 52-63.
Stock market bubbles? A reply, White, E. N. (1995). The Journal of Economic History, 55(3), 655-665.
The relative efficiency of the gold and treasury bill futures markets, Monroe, M. A., & Cohn, R. A. (1986). Journal of Futures Markets, 6(3), 477-493.
The commercial paper market, the fed, and the 2007-2009 financial crisis, Anderson, R. G., & Gascon, C. S. (2009). Federal Reserve Bank of St. Louis Review, 91(November/December 2009).
Bankers‘ acceptance financing–the link to financing global market activity, Weissman, I. (1996). The CPA Journal, 66(8), 64.
The promise and performance of the Federal Reserve as lender of last resort 1914-1933, Bordo, M. D., & Wheelock, D. C. (2011). National Bureau of Economic Research.
Are banks still special? New evidence on their role in the corporate capital‐raising process, James, C., & Smith, D. C. (2000). Journal of Applied Corporate Finance, 13(1), 52-63.