This paper examines the impact of financial development on the rates of investment in physical and human capital, again with and without accounting for country fixed effects. The development of financial sector through effective utilization of domestic resources is vital for economic growth and poverty reduction. During the first half of the 1990s Bangladesh experienced major financial sector reforms which included the liberalization of interest rates, improvement of monetary policy, abolishing priority sector lending, strengthening central bank supervision, regulating banks, improving debt recovery and broadening capital market development. To the extent that financial development facilitates growth by encouraging factor accumulation; we should observe their impact in these direct specifications.