acceptance credit

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A means of financing the sale of goods, particularly in international trade. It involves a commercial bank or merchant bank extending credit to a foreign importer, whom it deems creditworthy. An acceptance credit is opened against which the exporter can draw a bill of exchange. Once accepted by the bank, the bill can be discounted on the money market or allowed to run to maturity. In return for this service the exporter pays the bank a fee known as an acceptance commission.

Subjects: Financial Institutions and Services.

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