Financial development refers to a situation in which presenting of financial services have increased by financial institutes, and if the financial institutions have necessary efficiency, they transfer capital from savers to borrowers. Therefore, resources have led to productive investments and results in optimum allocation of resources. Generally, many factors have effect on financial development that can be divided to two groups of economical and non-economical factors. The present research attempted to study the effect of good governance and financial liberalization on financial development during (1996-2013) for developing countries in revenue breakdown with dynamic panel data method in descriptive-analytical approach. Indicators that are used to release are indicator of capital account restrictions. And political stability indices, voice and accountability, rule of law, quality of legislation, and control of corruption are studied as good governance indices. The results showed that in all estimated models, components of governance indices and financial liberalization in developing countries with low income have positive significant effect on financial development that are consistent with experimental and theoretical expectations. For developing countries with high income, the results show that in all estimated models, good governance has positive effect on financial development, and financial liberalization of these countries in all models has positive effect on financial development, except models in which good governance indices are quality of legislation and general indicator of good governance.
