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One century has passed since the explanation of relationship between financial development and economic growth by Schumpeter. However, there are serious debates among economists in this regard. Especially, the causality relationship between economic growth and financial development, in most of the cases, the causality from economic growth to financial development is confirmed in different countries. One of the neglected issues in this field is to consider the infrastructures, which can play important roles in the effectiveness of financial development on economic growth. One pillar of the financial development is the quality of banking financial services, which to a great extent is influenced by ownership and intervention of government in banking system. This paper, by using VECM model, tests the tri-variate causality among economic growthand financial development in the presence of public ownership of banks index during 1980 to 2010. The results show that in contrast to the bi-variate causality tests, which indicate the adverse causality from economic growth to financial development, the tri-variate causality tests reject this claim except for the case of the commercial banks’ assets.  

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Since financial development can contribute to the development of human capital, this paper examines the effect of financial development on human capital formation in Iran during 1973-2010. Regarding financial development as a multifaceted concept, this article first deals with constructing a multidimensional index, including ratio of M₂to GDP, ratio of private debt to banks to GDP, ratio of central bank assets to GDP and  the ratio of assets of deposit-accepting banks to GDP, using principal components analysis with SAS. Then, using Auto-Regressive Distributed Lags (ARDL) model, the effect of financial development on human capital is estimated through Microfit 4. The results suggest that financial development has significant positive effect on human capital in the short- and long term, and the magnitude of influence is higher in the long term than short term.