Electronic Thesis and Dissertation Repository

Thesis Format

Integrated Article

Degree

Doctor of Philosophy

Program

Business

Supervisor

Adam Fremeth

Abstract

The energy sector has been at the forefront of the global policy agenda over the past decade, driven by a confluence of critical problems. In particular, developing countries face a disproportionate economic burden due to their vulnerabilities, such as weak institutional frameworks, underdeveloped financial markets, and higher uncertainty in business environments. This dissertation focuses on electricity market dynamics in a developing country context, Turkiye, and explores how this market has responded to changes in the external environment.

The first essay explores the effects of monetary policy shocks on the Turkish electricity market. There is limited research on the impact of monetary policy transmission channels, notably the exchange rate, on the electricity markets in developing countries. Using unexpected monetary policy shocks for identification, this essay shows that monetary policy shocks create asymmetric market outcomes. Generators respond to unexpected expansionary monetary policy shocks by adjusting their output; however, a similar effect is not observed for unexpected contractionary monetary policy shocks.

The second essay estimates the effect of key macroeconomic variables on the capital structure and investment outcomes of small and medium-sized enterprises (SMEs) within the Turkish power sector, using a rich, novel dataset and panel data methods. This essay complements the existing body of literature by providing empirical estimates of the effects of macroeconomic variables on capital structure and investment dynamics in these countries.

Finally, the third essay evaluates the welfare effect of the temporary price cap implemented in 2017 on the Turkish electricity market following a natural gas supply disruption in December 2016. Using propensity score matching and panel data methods, this essay shows that regulatory intervention deteriorated the overall economic welfare in the electricity market.

Overall, this thesis delves into the intricate interplay between the energy transition and institutional settings in a developing country context. It aims to shed light on the specific challenges and obstacles faced by these countries as they strive to align their policies with those of developed economies.

Summary for Lay Audience

The current era is marked by a significant transformation in the global landscape, particularly in the energy sector. This change is driven by a complex confluence of geopolitical tensions and economic pressures, including prolonged conflict in Ukraine and instability in the Middle East. These factors have led to a pronounced global energy crisis, impacting the progress of energy transition. Despite these challenges, there have been notable advancements in the transition to clean energy, as evidenced by substantial investments in renewable energy sources. However, current efforts are insufficient to meet global climate goals; the urgency to secure affordable and reliable energy, while aggressively pursuing climate mitigation strategies, has never been greater.

This dissertation aims to delve into the multifaceted challenges that developing countries encounter in electricity market operations. The primary research question is divided into two critical aspects: ``What are the prevalent issues within electricity markets in developing countries?'' and ``How do these markets respond to significant political and economic challenges?'' To comprehensively address these queries, this research will concentrate on a specific country, Turkiye, providing an in-depth analysis of its electricity market. This approach allows for a detailed examination of the unique problems faced by this market and how it navigates the complex interplay of economic, technological, and political factors inherent in the energy transition.

The first essay investigates the impact of monetary policy shocks on the Turkish electricity market. Utilizing unanticipated monetary policy shocks as a basis for identification, this essay examines the responses of electricity market prices and generator behavior to these shocks. The findings reveal asymmetrical market reactions; generators adjust their output in response to unanticipated expansionary monetary policy shocks. However, a similar response is not evident in the face of unanticipated contractionary monetary policy shocks.

The second essay estimates the effect of key macroeconomic variables on the capital structure and investment outcomes of small and medium-sized enterprises (SMEs) within the Turkish power sector using a rich, novel dataset and panel data methods. This essay contributes to the existing literature by offering empirical insights into how macroeconomic factors influence capital structure and investment strategies within SMEs in this sector.

The final essay critically examines the welfare implications of the temporary price cap introduced in the Turkish electricity market in 2017. This regulatory measure followed a disruption in the natural gas supply in December 2016. Employing propensity score matching and panel data analysis techniques, this essay reveals that this regulatory intervention had a negative impact on the overall economic welfare of the electricity market. The findings provide valuable insights into the complexities and unintended consequences of such policy interventions in the energy sector.

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Available for download on Friday, May 01, 2026

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