What Japanese asset-price bubble burst after the Nikkei 225 peaked at the end of 1989?

The Japanese asset-price bubble burst after the Nikkei 225 peaked at the end of 1989.

Japan’s asset-price bubble was a period of exceptionally rapid increases in Japanese share and land prices during the second half of the 1980s. The Nikkei 225 reached an intraday high of 38,957.44 on December 29, 1989. It then entered a prolonged decline as monetary conditions tightened, credit weakened, and confidence in inflated valuations collapsed.

The bubble was not limited to stocks. Commercial land in major cities also reached extraordinary prices, while banks expanded lending against rising collateral values. When asset prices fell, borrowers and financial institutions were left with large debts and impaired loans.

The subsequent stagnation is often called Japan’s Lost Decades, although the timing and interpretation of that term vary. The bubble itself is distinct from the 1997 Asian financial crisis, which began with Thailand’s currency devaluation and affected a different group of economies.