I noted recently Robert Putnam's finding that the more ethnically diverse a neighborhood is, the less social capital it has. He was not too happy to be reporting this.
A new study of British Muslims (by an NYU-led team reporting for a German research institute) has found that Muslims living in integrated neighborhoods had a stronger Muslim identity than Muslims living in segregated Muslim neighborhoods. The team, led by Alberto Bisin, found that Muslim religious and communal identity was stronger where Muslims lived together with non-Muslims.
Muslims have a stronger oppositional identity when faced with the daily contrast of non-Muslims. British Muslims are significantly more religious and fertile than their non-Muslim neighbors. For them, assimilation would mean losing two of the most important things in life. Muslims in predominantly Muslim neighborhoods, by contrast, don't feel as threatened by British norms and are less likely to develop an oppositional identity.
The main point, I think, is not that ethnic or religious neighborhood integration is bad or good. Rather, integrated neighborhoods are less likely to have strong neighborhood institutions and identities, even if they do develop stronger ethnic institutions and identities.