A better functioning financial sector matters directly for growth and contributes indirectly for poverty alleviation and welfare in Least Developed Countries (LDCs), through managing liquidity risk, acquisition of information, resource allocation, monitoring investment projects, saving mobilization, and facilitating exchange of goods and services. A vast variety of literature deals with the analysis of performance of financial institutions and their outcome for developing countries, especially in the context of South Asian and African region. However after the global financial crisis there emerged a need to re-examine the issues and outcomes resulting after financial liberalization process pursued by these economies. Studies conducted in this context suggested that there is a need to build a sound institutional framework which could prove to be productive for growth and welfare performance of LDCs. With this background, present analysis is a re-examination of relationship between financial liberalization (FL), financial intermediation (FD), and economic growth indicators, while taking the interference of governance (GOV) indicators into the analysis. This dissertation aims to ascertain whether financial liberalization has had any impact on financial deepening and economic growth. To carry out this empirical analysis, study utilized time series data set over the period 1995 to 2012 (based on the availability of data for specific countries), a sample of seven South Asian countries and applied Generalized Method of Moment (GMM) system analysis for estimation. To measure the financial liberalization, financial intermediation and governance, Chinn-Ito index, domestic credit to private sector and world governance indicators (WGI) are used respectively. The analysis found a positive and insignificant relation between financial deepening and financial liberalization, however, the impact of governance indicator on financial deepening has been found to be negative and robust. Moreover, as per the individual dimensions of governance are concerned, political stability and government effectiveness are important in determining the financial development among other dimensions The interaction of governance indicator and financial liberalization term yielded significant and negative impact. In the context of legal origin, findings supported that countries with mixed legal system are more financially developed and the interaction of legal origin and FL has found to be positive showing that FL castes positive impact on FD in the countries with mixed legal system. In addition, as per the results of control variables, openness of trade has positive and significant impact on financial development and it has been verified that simultaneous opening of trade and financial sector also have positive and significant impact. Inflation and government spending have expected negative and positive link respectively, and their signs are supported theoretically. Finally, in growth equation, it has been found that economic growth is important for determining the financial development.