Sowing Sustainability: How does fintech mitigate agricultural financial risk from climate change vulnerability

This study examines the impact of climate vulnerability on agricultural finance and explores the moderating role of fintech in this nexus. Using a sample of 1,017 firms from 24 countries, we find that climate vulnerability is positively associated with agricultural finance, indicating that climate change exacerbates financial constraints for firms. Interestingly, our analysis of fintech's moderating effect reveals that fintech mitigates the negative impact of climate vulnerability on agricultural finance by promoting climate-smart agricultural practices and encouraging the adoption of insurance by farmers. Furthermore, our findings highlight that the Fourth Industrial Revolution, strong institutional quality, higher levels of innovation, and a country's readiness for technological adoption play critical roles in reducing the effects of climate vulnerability. Digital technologies, by improving operational efficiency and enabling better measurement and tracking of climate impacts, help reduce carbon emissions. These insights offer important managerial and policy implications, emphasising the need for integrating fintech and digital solutions to enhance resilience in agricultural finance.