Abstract
This research paper demonstrates the association between economic growth and financial development in Pakistan for time period 1979 up to 2008.The procedure of basic elements are used to develop FSDI (financial sector development index) that is utilized to proxy sector Development. With the help of method known as auto regression distributed lag (ARDL), this research paper indicates co integrating association between real deposit rate, real interest rates, financial investment and development. According to the research findings, economic growth is positively related to real deposit rate in long run perspective but its impact is insignificant. Short run as well as long run real interest rates responses are very low in comparison to variable of financial development, giving implications that funds delivery is vital as compared to its cost.
Keywords: Financial Development, Economic Development, Growth