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Household repayment behaviour and neighbourhood effects

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  • Sarah Brown

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.

Suggested Citation

  • Sarah Brown, 2015. "Household repayment behaviour and neighbourhood effects," Urban Studies, Urban Studies Journal Limited, vol. 52(6), pages 1169-1188, May.
    • Handle: RePEc:sae:urbstu:v:52:y:2015:i:6:p:1169-1188
    DOI: 10.1177/0042098014533393
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    Cited by:

    1. Lenarčič, Črt, 2022. "Drivers of household arrears: an euro area country panel data analysis," MPRA Paper 114558, University Library of Munich, Germany.
    2. Suzuki, Masatomo & Kawai, Kohei & Shimizu, Chihiro, 2022. "Discrimination against the atypical type of tenants in the Tokyo private rental housing market: Evidence from moving-in inspection and rent arrear records," Journal of Housing Economics, Elsevier, vol. 58(PB).

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