Household repayment behaviour and neighbourhood effects

Sarah Brown ()

Urban Studies, 2015, vol. 52, issue 6, 1169-1188

Abstract: The recent financial crisis has revealed the financial vulnerability faced by a significant number of households in the UK. Households experiencing financial problems may potentially fall into arrears in meeting financial obligations such as rent, mortgage payments or household bills. Indeed, such arrears have been regarded as one of the most direct measures of financial stress at the household level. In this paper, we explore the relationship between household repayment behaviour and neighbourhood ties in order to identify possible channels of support for households experiencing financial stress. We analyse data on 17,723 households drawn from wave 1 of the UK longitudinal study, Understanding Society, merged with information on neighbourhood ties defined at the postcode area level elicited from a sample of 48,906 individuals. Our findings, which relate to the post financial crisis era, suggest that households in regions characterised by strong neighbourhood ties are less likely to report being in arrears and that this relationship is particularly apparent in the case of housing costs. This inverse relationship is strongest in regions characterised by a high density of individuals who feel able to turn to someone in the neighbourhood for support or advice. Thus, neighbourhood and community groups, which enhance social interaction and neighbourhood ties, may be effective channels of support for financially vulnerable households.

Keywords: arrears; household finances; neighbourhood effects (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:52:y:2015:i:6:p:1169-1188

DOI: 10.1177/0042098014533393

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