Abstract: Motivation: This paper aims to examine the impact of financial development on economic growth.
Novelty: The study enriching literatures and provide a baseline for further researches.
Methodology and Methods: This article uses the system GMM to analyze data, to ride of the reverse causality problem and considering a dynamic model.
Data and Empirical Analysis: The used data for 193 countries around the world, the study used domestic credit to the private sector as a percentage of GDP, board money definition M3, and financial market capitalization as proxies to indicate financial development. Whereas GDP per capita growth rate is used as a proxy for economic growth.
Policy Considerations: The study finds that there is a significant mild positive impact of financial development on economic growth, this paper recommended further researches to investigate the impact over the developing and developed countries separately by using dynamic models.
Keywords: Financial development, economic growth, developing economies.