This paper explores the relationship between microfinance and economic development using a cross country dataset of 60 developing countries for the period 2000-2018. We employ the Panel VAR model, estimated by the generalized method of moments (GMM). Microfinance institution (MFI) indicators are categorized into social performance variables and financial performance variables. Social performance variables include the number of clients served (NOB) and the percentage of women borrowers (PFB), while financial performance indicators consist of the portfolio at risk (PAR), operational self-sufficiency (OSS), and operating expenses (OPX). Economic development is assessed using the Human Development Index (HDI), which integrates economic indicators like Gross National Income per capita (GNI) with social indicators such as life expectancy at birth (LE) and educational attainment (EDI). Our findings indicate that social performance variables positively influence economic development, and shocks to financial performance variables significantly impact the human development index. Additionally, our results confirm the existence of a Granger causal relationship between microfinance and economic development