Green chillies shrink after refrigeration primarily due to moisture loss and cell wall damage caused by the cold temperature. This dehydration leads to a reduction in size and a change in texture.
Green chillies are mostly water. When refrigerated, the cold temperature causes the water inside the chilli to evaporate, leading to moisture loss. This process is accelerated if the chillies are not stored properly. Furthermore, the freezing temperatures within a refrigerator can damage the cell walls of the chilli. This damage weakens the structure of the chilli, causing it to collapse and shrink. The combination of moisture loss and cell wall damage results in the shriveled appearance and altered texture that you observe. The chillies essentially dry out and lose their plumpness.
To prevent green chillies from shrinking in the refrigerator, store them in an airtight container or a zip-top bag with a paper towel to absorb excess moisture. This helps to maintain humidity and slow down the dehydration process, keeping them fresher for longer.