The paper explores the hypothesis that financial constraints prevent poor countries from fully utilizing technology transfer, leading to divergence in growth rates. It introduces credit constraints into a multicountry Schumpeterian growth model with technology transfer, predicting that countries with a critical level of financial development will converge to the world technology frontier's growth rate, while others will have lower long-run growth rates. The theory is supported by cross-country growth regression evidence, showing a significant negative coefficient on initial per-capita GDP interacted with financial intermediation. Other variables like schooling, geography, health, policy, politics, and institutions do not significantly affect the interaction between financial intermediation and initial per-capita GDP. The findings are robust to various robustness tests, including outlier removal and alternative estimation procedures. The paper also discusses the theoretical framework, dynamic patterns of convergence, and the implications for financial development and convergence.The paper explores the hypothesis that financial constraints prevent poor countries from fully utilizing technology transfer, leading to divergence in growth rates. It introduces credit constraints into a multicountry Schumpeterian growth model with technology transfer, predicting that countries with a critical level of financial development will converge to the world technology frontier's growth rate, while others will have lower long-run growth rates. The theory is supported by cross-country growth regression evidence, showing a significant negative coefficient on initial per-capita GDP interacted with financial intermediation. Other variables like schooling, geography, health, policy, politics, and institutions do not significantly affect the interaction between financial intermediation and initial per-capita GDP. The findings are robust to various robustness tests, including outlier removal and alternative estimation procedures. The paper also discusses the theoretical framework, dynamic patterns of convergence, and the implications for financial development and convergence.