This paper tests the effects of the impact of financial globalization on economic growth, examining its interaction with financial instability for a sample of 72 developing countries over the period 1972-2011, using dynamic panel estimator 'two-step Generalized Method of Moments' (two-step system GMM). The main results of the paper are the following: (i) financial instability and indebtedness-globalization decrease growth; (ii) financial globalization and investment-globalization increase growth; (iii) indebtedness-globalization increases the effect of financial instability on growth; (iv) investment-globalization decreases the effect of financial instability on growth; and (vi) financial globalization decreases the effect of financial instability on growth. These results are robust in a set of tests consisting of the insertion of alternative variables of financial instability, the inclusion of new control variables, inter alia an indicator of banking crises, using different time periods, and changing of the composition of the sample.