The review of previous literature on Akerlof's lemons and peaches in the
loan market provides extremely limited information. Our empirical
study addressed the question of how monetary policy, through different
transmission mechanism channels, influences the lemons and peaches in
the credit market for Azerbaijan during 2006-2017. Based on the results
of the VEC model, we found out that monetary policy through exchange
rate, lending, and unexpected price level transmission mechanism channels negatively affects the lemons while they positively influence the
peaches in the credit market of Azerbaijan. Empirical outcomes suggest
the effectiveness of lending, unexpected price level, and exchange rate
channel in terms of coping with lemons. It would be extremely engrossing to see which transmission mechanism channels are substitutes and
which are complements to one another, based on which one can define
whether the substitute or complement transmission channels are effective in terms of dealing with the lemons problem in the credit market.
Citation:
Mammadova, N. (2021). Akerlof's lemons and peaches in Azerbaijan credit market: Turning lemons into lemonade through monetary transmission channels. ASERC Journal of Socio-Economic Studies, 4(2), 83-115. DOI:10.30546/2663-7251.2021.4.2.83