This paper analyzes yhe role of financial development on economic output in Indonesia. Using vector autoregressive method the result confirm the positive impact of financial development on output growth. The interaction between the financial development and the shock either in financial or real sector shows that the financial development has a positive role to dampen the negative impact of the shock on the output growth while strngthen the positive one. Another variable on the model which significantly affect the output growth are excess money term of trade and the price. Compare to these variables the marginal effect of financial development on output is smaller.