This research paper investigates the long-run relationship between development of banking sector and the per-capita economic growth in G-20 countries for the period 1961-2013. Using cointegration and Granger causalities, the study finds the presence of both bidirectional and unidirectional causality between development of banking sector and per capita economic growth. In some ocassions, per capita economic growth leads to development of banking sector; lending support of demand following hypothesis of finance growth nexus. On other ocassions, it is development of banking sector that determines the level of per capita economic growth, lending support of supply leading hypothesis of finance growth nexus. The policy implication of this study is that the economic policies should recognize the differences in the development of banking sector and the per-capita economic growth in order to maintain sustainable development in the G-20 countries. © Indian Institute of Finance.