The MPs are examining the role that BHS directors and advisers played before the retailer was sold for Â£1 last year.
Anthony Gutman said he told Sir Philip's Arcadia Group about Mr Chappell's history of bankruptcy and lack of retail experience.
Arcadia executives said they considered Mr Chappell's history before the sale.
The joint session of the Commons Business and Work and Pensions select committees heard BHS had made losses for six years before the sale.
Under Mr Chappell's ownership, BHS entered administration earlier this year, putting 11,000 jobs at risk and leaving a Â£571m pensions deficit.
MPs grill BHS directors and advisers - as it happened
Mr Gutman, co-head of Goldman Sachs' European investment banking services, told MPs he gave his "observations" to Paul Budge, Arcadia's finance director, four months before the sale.
Goldman Sachs did not rule out the deal, although the transaction was "too small" for the investment bank to handle as a formal adviser, he said.
Under questioning from MPs, Mr Budge said Arcadia knew of one of Mr Chappell's bankruptcies during sales talks.
However, "this was not one man on his own" and Mr Chappell was part of a consortium with experienced businessmen, the Arcadia finance chief told MPs.
The main criteria for Arcadia was the consortium's access to financing and its desire to keep BHS running, Mr Budge said.
Earlier, the MPs heard that advisers at accountancy firm KPMG also raised concerns about the little-known Retail Acquisitions.
David Clarke, a partner at KPMG, told MPs: "We were particularly concerned about its ability to continue to trade and fund both BHS - which was clearly loss-making - and the [pension] schemes."
KPMG, which was an adviser to the embattled BHS pension schemes, sent their concerns to the retailer and its other advisers ahead of the sale, Mr Clarke said.
Other advisers from accountancy firms Deloitte and PwC, and law firm Eversheds, said they had not raised concerns about Retail Acquisitions.
The MPs heard that BHS management decided to pause a pension rescue plan, known as Project Thor, in 2014 to let managers focus on trading.
The rescue plan was then shelved in February 2015 as the possibility of a BHS sale emerged, the committee heard.
That revelation takes some pressure off the Pensions Regulator, which had faced questions about why it did not allow Project Thor to go ahead.
A Goldman Sachs banker told a key executive from Sir Philip Green's company about the risks of selling BHS to Dominic Chappell, MPs heard.