Abstract
This study investigates the relationship between the economic growth and financial development of 13 major shareholding countries of Islamic development bank (IDB) from 1993 to 2015. By applying Konya (2006) estimation technique on various proxies of economic growth and financial development this study reports its results. According to the results of this study there is strong evidence in favor of the direction of casuality from economic growth to financial development thus supporting demand following hypothesis. The findings of this study reveal that economic growth leads to financial development in 13 major shareholding countries of Islamic development bank (IDB). Although majority of results favor the demand following hypothesis, however nuetrailty hypothesis is also present in some countries.