This paper uses the establishment of inclusive finance departments by large banks as a quasi-natural experiment. Based on annual data from 654 rural financial institutions in China, it applies a continuous DID model to examine the impact of the establishment of inclusive finance departments of large banks on the lending behavior of rural financial institutions. The findings indicate that large banks' competition significantly reduces rural financial institutions' loan amount, crowding out their lending capacity. However, this initiative fails to promote a retail-oriented transformation in their credit business. Further analysis indicates that large banks' competition did promoted rural financial institutions to improve the affordability of their inclusive finance service but fail to enhance its usage and accessibility.