This paper examines the impact of climate variables and financial development on agricultural value-added and cereal production in selected Southeast Asian economies from 1970 to 2016. The current research applies second-generation advanced techniques to accomplish robust and reliable outcomes. The findings from the FM-OLS estimation disclose that climatic factors, for instance, CO2e and average temperature, impact both agricultural value-added and cereal production negatively, and financial development has an inverted U-shaped influence on both agricultural value-added and cereal production. Meanwhile, other important factors, including cropped area, income level, and rural labor force, significantly improve agricultural value-added and cereal production. Furthermore, the FM-OLS estimator's D-H panel causality test outcomes are reliable. The findings of our study reveal that both the short- and long-run risks of climatic changes to the agricultural sector pose a large-scale threat to food security in Southeast Asian economies. As a result, a robust and stable financial development in terms of governance of climate change finance in the agriculture sector must be achieved to enhance farmers' ability to adapt to current and future climate change adverse impacts.
Keywords: Agricultural productivity; Climate change; Financial development; Southeast Asian countries.
© 2022. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.