With the development of inclusive finance and branch expansion of commercial banks, the problems of difficult and expensive financing have been alleviated to a certain extent. However, the departure of credit funds from the real economy to fictitious economy has also attracted a lot of attention. Using the geographic coordinated data of A-share listed companies and bank branches from 2011 to 2020, we calculate the borrower-lender distance between each firm and bank branch, and examine the impact of the borrower-lender distance on firm’s allocation on financial assets. We find that the borrower-lender distance is negatively correlated to allocation ratio of financial assets. On the borrower side, the shortening of the distance increases credit availability, which improves the real investment and reduce the allocation on financial assets; on the lender side, the shortening of the distance enhances supply of financial products from the underwriting banks, which promotes firms’ allocation on financial assets. Furthermore, the loosening of monetary policy reinforces the negative correlation between borrower-lender geographical distance and firms’ allocation on financial assets. The conclusions of this paper are conducive to improving the efficiency of inclusive finance in supporting the real economy and mitigating excessive financialization of non-financial enterprises, further preventing systematic financial risks.