The asymmetric impact of agricultural finance and technological innovation on sustainable food production and emission reduction in Indonesia

The key objective of the study is to explore the direct and indirect effects of agricultural credit (AGCR) and technological innovations (TCI) on food production (FOOP) and agricultural greenhouse gas emissions (AGHGs) in Indonesia across lower, medium, and higher quantiles. This study fills the gap by analyzing how AGCR and TCI jointly influence FOOP and AGHGs, providing new insights into the productivity–environment trade-off and sustainable agriculture. Using quarterly data from 2000 to 2022, the Quantile Autoregressive Distributed Lag (QARDL) and Canonical cointegrating regression (CCR) models are employed to capture short- and long-run dynamics and asymmetries. The findings show that AGCR significantly enhances FOOP but also increases AGHGS across almost all quantiles, highlighting the environmental trade-offs of agricultural finance. Although the direct impact of TCI on FOOP is evident only in the middle quantiles, TCI significantly increases AGHGS at the medium and high quantiles. Notably, the interaction term (TCIxAGCR) shows that TCI enhances the positive effects of AGCR on FOOP, especially at lower and middle quantiles, while simultaneously reducing AGHGS across almost all quantiles. Control variables such as fertilizer use (FTU) and transport infrastructure (TRINF) also show significant roles—FTU boosts FOOP, while TRINF contributes to higher AGHGS. The Wald test supports the non-linearity and justifies the QARDL model. The CCR model also verifies the findings of the QARDL model. The study highlights the trade-off between agricultural credit’s role in boosting food production and its contribution to increased emissions, while showing that integrating technological innovations with credit can foster sustainable, low-carbon agriculture in Indonesia.