Taking China’s inter-provincial panel data from 2006 to 2016 as research samples， this paper uses the Malmquist-Luenberger index to measure the efficiency of China’s inter-provincial green economy. On the basis of this， this paper constructs the spatial dynamic panel Durbin model to explore the mechanism of capital market distortion on the efficiency of green economy. The results show that: （1）Green economic efficiency has significant path dependence effect in time dimension. If the green economic efficiency in the previous period is higher， the green economic efficiency in the next period may continue to improve. （2） Capital market distortion has a significant negative impact on green economic efficiency. In the developed areas， the negative effect is relatively weak， and there is a U-shaped relationship between economic development level and the green economic efficiency. （3） Through the analysis of intermediary effect test， it is found that capital market distortion has a negative impact on green economic efficiency by restraining technological innovation， hindering industrial upgrading and aggravating environmental pollution.