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The theoretical literature of economic growth (endogenous and exogenous growth model) and empirical evidence in developed and developing countries show that without financial reform, sustainable development is impossible. The positive effects of financial sector development on economic growth and developments in the international financial sector make a more important issue. Some economists believe that financial reforms through increasing the level of savings and investment can provide economic growth. Also, some economists believe that financial reform by international capital mobility and technology transfer can cause income convergence among countries. This study investigates the theoretical foundations of financial development, financial system and its functions, and also the analysis of the effect of financial reform on economic growth and creating income convergence among selected Islamic countries during 2008-1979. Estimation results show that financial reform through liquidity has direct and significant impact on economic growth. The crossover effect of economic growth and liquidity has direct and statistically significant effect on income convergence.

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Foreign exchange (FX) markets play a significant role in the global financial market, so that it comprises 40% of total global e-commerce values. However, reports show a 90% loss of entire investment of traders in this market usually after six to 12 months after entrance. This paper analyzes losing values of the majority of traders theoretically and empirically. Furthermore, by ignoring spread of broker and existence of inflation, it is shown that the FX market is a repeating zero-sum game. So, by developing a theoretical model in a framework of the Probability Theory, we have shown that probability of a loss in the FX market is quite high. Results show that the loss of the majority of trade occurs undoubtedly. Using two major currency pair data: Euro-Yen (EURJPY) and Euro-Dollar (EURUSD) in a daily duration in 2009 and 2010, we show that probability of failure (loss) cannot be less than 90%. We also showed the fact that, the larger number of transactions, the higher percentage of traders’ losses. The higher probability of loss also depends directly on the volatility of exchange rate and higher rates of spread and leverage.