In Poland, farmers rely primarily on cooperative banks for agricultural credit. Therefore, the paper attempt is to examine the impact of agricultural credits disbursed by the cooperative banks on regional development of agricultural sector in Poland over 1997- 2006. Sources of data include financial statements of the banks (1373 observations) providing credit-related information and sectoral background data for agriculture from Central Statistical Office of Poland. The levels of agricultural development were assessed using a nation-level and regional-level composite indicators constructed by the author by the use of factor analysis. Additionally, one-factor ANOVA, Pearson correlations and linear regression were applied. There was found, that the most prosperous agricultural regions include wielkopolskie, zachodniopomorskie and warminsko-mazurskie, the least prosperous malopolskie, podkarpackie, slaskie and swietokrzyskie voivodships. Results of econometric analysis suggest also that region of bank’s activity has statistically significant impact both on agricultural credit and agricultural development levels. In Poland as a whole, farm credits provided by cooperative banks stimulate development of agriculture but only in two of sixteen regions (voivodships) their impact was positive and statistically significant. The average farm size and agricultural employment were found to be strongest in influencing agricultural development.