This research explored the relationship between financial development and economic growth in the MENA region from 1996 to 2022. Using panel data, it assessed whether financial institutions and financial markets had differing impacts on economic growth. Various statistical methods, including OLS, GMM, quantile, and U-tests, were employed to analyze this correlation. Our findings revealed a nonlinear relationship between financial development (institutions and markets) and economic growth, characterized by an inverted U-shaped curve. This relationship was influenced by the MENA region’s limited financial regulations and the “vanishing effect”. Financial institutions were found to have an insignificant impact on economic growth but played a role in constraining it. Conversely, financial markets significantly contributed to growth initially, but this effect diminished over time, eventually turning negative. Additionally, this research highlighted the positive influences of liquidity and exports on economic growth, while noting that the rule of law and political stability had adverse effects.