Sixty per cent of respondents said that the viability of many SMEs is at risk with retail and real estate sectors the most vulnerable.

"The next 12 months will see a significant number of mid-sized corporate insolvencies in Australia," said insolvency and restructuring partner, Steven Palmer. "I suspect we have already seen most of the very large collapses, although I have little doubt that there may be a couple more to come."

Palmer explained that many long-term problems have been financed, or refinanced, on a short term basis. "There is still significant pressure in a number of sectors including retail, aged care, property and infrastructure," he said. "There is continued upward pressure on interest rates and while the new found strength of the Australian dollar may deliver a windfall to some, it will be catastrophic for others, particularly if they have not hedged adequately."

Respondents also believe that the global financial recovery will be long and shallow and that liquidity will not return to pre-crisis levels in the banking system until at least 2012.

Despite concerns about liquidity - viewed as the greatest risk to business prospects - respondents were optimistic about investment opportunities in Australia, with the country noted as the best prospect for business outside of Asia.

Australian respondents view their own economic growth as stable, however their expectations for global recovery were less optimistic. Thirty six per cent of Australian respondents believe a double-dip recession will eventuate.

"While China, India and the Asia Pacific region continue to be the principal drivers for economic growth, the direction of the nascent global recovery will depend on how remaining structural issues, such as the levels of sovereign debt in Europe and the US are addressed," said head of financial institutions at Norton Rose, Dan Marjanovic.

"An interesting outcome reflected in the survey was the diminished global appetite for regulatory reform, in line with recent G20 discussions and commentary on the effects of Basel III," he said.

The report, Global Financial Recovery: A Matter of Perspective, details the views of 314 respondents from a range of financial institutions including banking, insurance and funds.