The aim of this paper is to analyze the relationship between foreign direct investments and financial development in Bahrain. The estimation financial development effects was performed for the period 1978 to 2015, which covers the political conflicts that recently happened in Middle East area (Arab Spring). On the other hand, the paper sought to examine the causality relationship between foreign direct investments and financial development. The study empirically investigates the short and long run equilibrium relationship between the variables by applied co-integration and Autoregressive Distributed Lags Approach (ARDL). The Granger causality test was employed to capture causality relationship. The obtained results show that there is a significant positive relationship between FDI and financial development in short and long run, while, a significant negative relationship between Arab Spring and financial development. However, the results also revealed bidirectional causality relationship between FDI and financial development.; Cilj je ovog rada analizirati odnos izravnih stranih ulaganja i Þ nancijskog razvoja u Bahreinu. Procjena u􀄀inaka na Þ nancijski razvoj provedena je za razdoblje od 1978. do 2015. godine, koja obuhva􀃾a politi􀄀ke sukobe koji su se nedavno dogodili na podru􀄀ju Bliskog istoka (Arapsko prolje- 􀃾e). S druge strane, rad je nastojao ispitati uzro􀄀ni odnos izme􀄁u izravnih stranih ulaganja i Þ nancijskog razvoja. Rad empirijski istražuje kratkotrajni i dugoro􀄀ni odnos ravnoteže izme􀄁u varijabli primjenom kointegracijskog i ARDL pristupa. Grangerov test uzro􀄀nosti primijenjen je kako bi se otkrio uzro􀄀ni odnos. Rezultati pokazuju da postoji zna􀄀ajan pozitivan odnos izme􀄁u izravnih stranih ulaganja i Þ nancijskog razvoja u kratkom i dugom roku, ali zna􀄀ajan negativan odnos izme 􀄁u Arapskog prolje􀃾a i Þ nancijskog razvoja. Me􀄁utim, rezultati tako􀄁er upu􀃾uju na dvosmjerni uzro􀄀ni odnos izme􀄁u izravnih stranih ulaganja i financijskog razvoja.