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: A well-developed financial system promotes the effective sharing of saving by supporting access to financial institutions and lowering transaction costs. It also monitors transactions through the regulatory organizations, promotes an efficient market by exchanging services, goods, technology, and knowledge, as well as reduces uncertainty through efficient risk management methods. The present study examines the impact of financial indicators related to the banking sector on the Human Development Index (HDI). A GMM approach is applied by using the data from 1996 to 2018. Gulf countries are taken as a case study. The results showthatbank credits to bank deposits, credit to private sector and banking concentration have a positive relationship with the HDI. However, the bank cost to income ratioshows a negative relationship with the HDI. Thisindicates that the higher bank operating expenses in Gulf countries were negatively related to human development. The bank net interest margin and credit to government sectors show a negative relationship with HDI. Thus, it is recommended to decrease the operating expenses, minimize the credit ratio to government sector and increase the share of private sector to enhance HDI.