A necessary and important ingredient in the development process of rnrnsubsistence agriculture is the introduction of improved technology and landrnmanagement practices. But these are related to the availability of suitablernagricultural credit facilities. Although several agricultural credit policiesrnand programmes nave been introduced in Ethiopia very few peasant farmers rnrnhave been integrated in to these programmes. More over ,the proportion of private peasant using agriculture credit has remained unsatisfactoryrnrn.except for some short-term credit from the Ministry of Agriculture for inputrnprocurement';, agricultural credit services available to the peasant farmersrnare still of a rudimentary nature.rnrnIn light or these facts, it would be desirable to find concrete explanationsrnfor the low level of credit use by subsistence farmers. Consequently,rnthe central objective of t he thesis has been the determinations of bothrninstitutional and non-institutional factors which influence subsistencernfarmers credit use. since the detailed information base necessary tornforward a solution to the problem is not readily available , the case studyrnmethod has been considered to find such details. Towards this end, tworndistricts were purposively selected on the basis of their response to thernintroduction of improved technology . A random sample of two peasantrnassociations was drawn from each district and from each peasant associationrnselected , a simple random sample of farm household heads was taken .Data rnwere collected in the months of March and April 1986.rnrnBoth Qualitative and quantitative techniques were used to analysernthe stated objectives. In particular , the techniques of discriminate rnanalysis and multiple linear regression analysis have been applied tornidentify the important socio-economic factors that characterize creditrnusers and non-users and those which determine the volume of loan absorbedrnby a farm household.rn'The result of the study has shown that subsistence farmers creditrnuse has been limited by institutional factors both before the Revolutionrnand after the revolution. the findings also show that peasant farmers 'rncredit use is also influenced by a set of social and economic factors .rnThe level of education, the use of improved technology , the size of operationalrnarea , inadequate market arrangements together with extension servicernavailability and two of the hypothesised production limitations (need forrnmore land and product price security) have been observed to be the mainrnfactors which distinguish borrowers from non- borrowers. The age of thernfarm household head and investment expenses are also important to classifyrnfarmers as borrowers or non- borrowersrnrnThe results of the multiple linear regression analysis have alsornindicated that the variations in loan size are explained by a set ofrnsocial- economic variables In this regard, income , credit experience, andrnvalue of livestock were found to be the main determinants of loan size .rnThe study reflects that the formulation of an appropriate agriculturalrncredit policy together with other complementary services is important inrnorder to raise agricultural productivity of subsistence farmers in ruralrnEthiopia .