Based on the panel data of Chinese listed companies from 2007 to 2019 and the relaxation of margin trading and short selling restrictions in China, this paper constructs a double difference model to analyze whether margin trading and short selling will encourage enterprises to carry out green technology innovation activities. Firstly, the research shows that after the implementation of the margin trading and short selling, the number of green technology innovation of the target company will increase significantly, while the quality of green innovation of the target enterprise will not change significantly. Secondly, we believe that the short selling threat is the main reason for the target enterprise to improve the number of green technology innovation, and the agency problem and the defects of incentive and motivation mechanism are the main reasons why the margin trading and short selling mechanism does not significantly promote the quality of green technology innovation of the target enterprise. Finally, we found that multiple policy environmental factors will affect the role of policies in promoting the number of green technology innovation of target enterprises.