This paper examines the relationship between financial development and long-term economic growth, finding strong evidence supporting Joseph Schumpeter's view that financial intermediaries play a key role in stimulating long-run growth. Using data from 80 countries over the 1960-1989 period, the authors find that financial development is strongly associated with both current and future economic growth, physical capital accumulation, and economic efficiency improvements. Three main findings are reported: (1) the average level of financial development is strongly associated with growth; (2) financial development precedes growth, with financial depth in 1960 positively related to real per capita GDP growth over the next 30 years; and (3) financial development is positively associated with both the investment rate and the efficiency of capital use. The study uses four financial development indicators, including financial depth, the relative importance of banks, credit allocation to private firms, and credit to the private sector relative to GDP. The results suggest that financial development is a significant predictor of long-run growth, consistent with Schumpeter's view that financial services stimulate economic development. The study also finds that financial development is linked to growth through two channels: physical capital accumulation and improvements in capital allocation efficiency. The findings highlight the importance of financial systems in fostering economic growth and suggest that policies aimed at improving financial development can have significant long-term benefits.This paper examines the relationship between financial development and long-term economic growth, finding strong evidence supporting Joseph Schumpeter's view that financial intermediaries play a key role in stimulating long-run growth. Using data from 80 countries over the 1960-1989 period, the authors find that financial development is strongly associated with both current and future economic growth, physical capital accumulation, and economic efficiency improvements. Three main findings are reported: (1) the average level of financial development is strongly associated with growth; (2) financial development precedes growth, with financial depth in 1960 positively related to real per capita GDP growth over the next 30 years; and (3) financial development is positively associated with both the investment rate and the efficiency of capital use. The study uses four financial development indicators, including financial depth, the relative importance of banks, credit allocation to private firms, and credit to the private sector relative to GDP. The results suggest that financial development is a significant predictor of long-run growth, consistent with Schumpeter's view that financial services stimulate economic development. The study also finds that financial development is linked to growth through two channels: physical capital accumulation and improvements in capital allocation efficiency. The findings highlight the importance of financial systems in fostering economic growth and suggest that policies aimed at improving financial development can have significant long-term benefits.