Against the dual background of the continuous optimization of China's financial institution system and the improvement of foreign trade quality and efficiency, the effect of changes in banking structure on export product quality has become a key issue in this field. Enterprise-level data from the China Innovation Survey Database and geographic information on bank branches were used. The number of bank branches within a certain radius around each enterprise is calculated as a proxy for the spatial expansion of banking institutions. The effect of such expansion on firms' export product quality was identified at the micro level. It is found that the spatial expansion of banking institutions significantly inhibits the improvement of export product quality. The result remains robust after multiple robustness tests. Mechanism analysis indicates that this inhibitory effect is generated through two channels. Firstly, enterprise entry thresholds are lowered. Consequently, the proportion of new entrants with lower productivity and poorer quality is increased, which reduces overall export quality. Secondly, enterprise financialization is intensified. Productive investment is crowded out, and incentives for R&D input and technological upgrading are weakened. As a result, the improvement of export product quality is suppressed. Heterogeneity analysis shows that the negative effect is more pronounced in small and medium-sized enterprises and private enterprises. A higher share of joint-stock banks strengthens the inhibitory effect, whereas a higher share of agriculture-related banks weakens it. Policy implications are provided for optimizing the spatial distribution of banking institutions, improving the efficiency of financial resource allocation, and promoting the improvement of China's foreign trade quality and efficiency.