The Nikkei 225 was the main stock index whose collapse marked the start of Japan's asset-price bubble crash.
The Nikkei reached its record closing level of 38,915.87 on December 29, 1989. It then fell sharply as Japan's extraordinary property and equity boom unwound. Banks had extended large amounts of credit against rising land values, and companies and investors had come to expect continued asset appreciation.
The decline did not produce a quick, single-session recovery. Falling land and share prices weakened bank balance sheets, reduced borrowing, and contributed to a prolonged period of slow growth and deflation. Japan's experience became known as the “Lost Decades,” although the timing and use of that label are debated by economists.
The Nikkei 225 is not the same as TOPIX. The Nikkei is a price-weighted index of 225 leading companies listed in Tokyo, while TOPIX is broader and weighted by market capitalization. Both were affected by the bubble's collapse.