For effective administration of agricultural credit, financial institutions while granting credit to farmers for agricultural purposes consider a number of factors. This paper focused on the evaluation of the critical factors that are considered by financial institutions in disbursement of credit to farmers in the Niger Delta area of Nigeria. Data for this study was collected from 20 formal and informal financial institutions operating in the study area. They were randomly selected and structured questionnaires were administered to them and interview schedule. The determinants of credit supply for agricultural purposes were found to be profitability of the investment, level of assets of the farmer-borrower interest rate, availability of credit, loan transaction costs, and level of risk bearing. Results show that the availability of credit was considered an extremely important factor in the supply of agricultural credit to farmers. However transaction costs was observed to be the least important factor considered by financial institutions in order to supply credit to farmer sin Niger Delta area of Nigeria

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