We empirically test the impact of core competence on the financialization of entity enterprises in this paper. This research finds that core competence can restrain the financialization of entity enterprises, and the mechanism test reveals that firms with strong core competences have two main mechanisms to inhibit financialization: 1) reducing the “profit-seeking motivation” by improving the performance of their main business and expanding the difference between the return on real and financial investment; 2) reducing the “reservoir motivation” by alleviating financing constraints.This paper enriches the literature on the economic consequences of core competence and the influencing factors of corporate financialization. At the same time, it provides theoretical guidance and practical significance for entity enterprises and regulators to “stop them being distracted from their intended purpose”, which promotes the high-quality development of economy.