In this paper we have examined how armed conflict is associated with financial development and to what extent armed conflict occurrences able to explain the variations in the financial sector in a cross-country perspective. The intention is to check whether there exists any systematically different financial development outcome among developing countries due to having occurrences of armed conflict. In order to address the question, the study exploits a panel data covering 66 developing countries for the period 1985-2010. Financial development has been measured by two proxy indicators: M2 as a share of GDP and credit allocated to private sector by banks as a share of GDP. Our findings suggest that armed conflict has significant adverse effect on financial development. In addition, quality of governance is found highly significant and conducive to the financial development. In one hand, governance quality appears with greater impact towards credit allocated to private sector as the effect of armed conflict seems insignificant. On the other hand, negative effect of armed conflict towards M2 as a percentage of GDP gets smaller in absolute term in the presence of governance quality; however, remain statistically significant. This paper also explores that the negative effect of armed conflict on M2 gets increased (in absolute term) as armed conflict intensifies. Nevertheless, governance performances seem trading off with low and medium intensity of armed conflict implying that governance quality does matter but cannot offset entirely the effect of high intensity armed conflict and its effect by retarding M2 as a share of GDP.