This article investigates whether financial development volatility effect on growth volatility of industries? The findings of the study are based on panel data consisting of seven manufacturing industries listed at Karachi Stock Exchange (KSE) over the period of 1994-2013. The Results of this study reveal that financial development in banking sector diminishes growth volatilities of industries that highly depend upon external liquidity. Whereas, financial development volatility in banking sector increases growth volatility of industries. Further, combined effect of both volatilities, banking sector and stock market, also raise growth volatility of Industries. Policy implications that come out from this study that regulatory authority should closely observe the behavior of financial markets to ensure the stability in economic growth more precisely, industrial growth of country. In addition, this study also suggests that there should be further development in banking sector in order to sustain economic growth and stability in Pakistan.