Allocating the funds of the financial sector to the real sector, accelerate economic growth via savings in a state of robust and efficient financial development. The role of capital flows is crucial for developing countries, due to insufficient domestic savings. The aim of this study is to investigate the relationship between capital flows and financial development using a dynamic panel data analysis for the period 1996-2018 in the Balkan countries. The results of the study show the positive and significant relationship between portfolio investment and other investments with financial development, financial development in financial institutions and financial development in financial markets. In addition, results show positive and significant relationship between portfolio investment and financial depth; positive and significant relationship between direct, portfolio and other investments and financial access but negative and significant relationship with short-term capital flows and lastly positive and significant relationship between portfolio and other investments with financial efficiency.