The current study investigates the role of fiscal capacity and governance in the finance-growth nexus in a large sample of high and middle-income countries from 2002 to 2017. The panel fixed effect regressions are applied to estimate finance's linear and threshold effects on economic growth. Estimation results based on threshold regression confirm that the too-much-finance-is-bad hypothesis is not valid in high-income countries. In contrast, the tipping point beyond which finance negatively affects economic growth is found in middle-income countries. Furthermore, complementarity between bank and market finance is only found in high-income countries. In addition, the level of economic development, trade openness, and human capital significantly affect the finance-growth nexus. Finally, fiscal capacity and governance are found vital in determining the finance-growth nexus, but its effect varies with the level of economic development.