The Croatian financial system has entered a new phase of its development. As a result of the important and deep changes that have altered the image of the banking system, the conditions for more dynamic development of non-banking intermediaries and capital markets have been created. In order to assess the achieved level of financial development, the Croatian financial system is compared with the financial systems of advanced transition economies. The analysis is based on the standard indicators of size and activity of banking and non-banking intermediaries as well as of those of capital markets. The results of the analysis show that the size and activity of Croatian banking system is comparable to that of the banking systems of advanced transition economies. However, the achieved level of development of non-banking intermediaries and the capital market is still below that of other advanced transition economies. It is expected that Croatian financial system will fill this gap relatively quickly since activities of pension funds, investment funds and bond markets are growing quickly.