Taking the financial data of China’s Ashare listed manufacturing enterprises from 2008 to 2017 as a sample, the endogenous switching regression model was used to investigate the impact of corporate financial overallocation on R&D investment. The study found that moderate allocation of financial assets does not have an extrusion effect on R&D investment, but excessive financialization has a significant negative impact on R&D investment. This conclusion still holds after controlling a series of endogenous problems. The crowdingout effect of excessive financialization on R&D investment mainly stems from “cash flow competition” rather than “product market competition”. For nonstateowned enterprises, hightech industries, and enterprises with low R&D investment adjustment costs, the excessive financialization is more obvious for the extrusion of innovation. By identifying the inherent logic and heterogeneity characteristics of financial restraint innovation, this paper provides a logical reference for promoting innovation drive.