Abstract

The rapid advancement of digital technologies has significantly transformed capital markets, fostering efficiency, transparency, and sustainability. This study explores the role of Sustainable Technology Adoption (STA)—including AI adoption, algorithmic trading, and big data analytics—in shaping sustainable financial ecosystems. The research employs a Structural Equation Modelling (SEM) approach to assess how STA impacts Sustainable Operational Efficiency (SOE), Sustainable Market Expansion (SME), and Regulatory Compliance for Sustainability (RCS), and how these factors ultimately influence Investor Perception of Sustainability (IPS).The findings reveal that STA enhances cost reduction, data management, and automation, leading to improved operational efficiency. Additionally, digital transformation facilitates market expansion through new geographic market penetration, client acquisition, and product innovation, thereby strengthening capital market sustainability. Regulatory compliance, including adherence to SEBI guidelines, risk mitigation, and investor protection, plays a crucial role in ensuring the long-term stability of digital financial markets. Furthermore, investor perception is positively influenced by the accessibility of e-trading platforms, security measures, and confidence in digital securities.This study provides empirical insights into the interdependencies among digital innovation, sustainability, and financial market efficiency. It offers strategic recommendations for financial institutions, policymakers, and regulators to enhance sustainable digital transformation, ensuring long-term growth, risk mitigation, and improved investor confidence in capital markets.