Tighter credit and defaults are expected to have a greater effect in 2008 than they did last year, a survey of businesses in 14 countries affected by the fallout found.

Businesses expect slower growth and growing defaults in the remainder of the year and into 2009, the survey sponsored by Atradius reported.

"While it seems natural to adjust your credit extension practices in the face of a deteriorating credit environment, there is no need to tighten credit policies if your receivables are sufficiently protected, for example by a credit insurance policy," said Atradius Management Board Vice-Chairman Peter Ingenlath in a statement.



The survey assessed the opinions of business leaders in North America, Europe and Australia.

Approximately 65% of the 2,500 respondents to the survey expect the credit crunch to result in some bank failures.

One surprising result of the survey is that businesses in Europe reported a higher direct exposure to subprime lending than in the United States by a margin of 9% to 14%. Mexico, at 51%, and the United States, at 46%, reported the highest levels of indirect exposure.

By industry, the energy sector has experienced the most tightening while the agriculture industry experienced the least, the survey found.

By Adam Button and edited by Nancy Girgis