Japan’s prolonged market collapse after its asset-price bubble burst in 1990 became known as the Lost Decade.
During the late 1980s, Japanese land and stock prices rose to exceptionally high levels. The Nikkei 225 reached its peak of 38,957.44 on December 29, 1989. After the bubble burst, equity and property prices fell, leaving banks with large quantities of bad loans.
Weak banks reduced lending, while companies and households focused on repairing their balance sheets. These pressures contributed to low growth, falling prices, and prolonged economic stagnation during much of the 1990s.
The phrase “Lost Decade” originally described the 1990s, but some economists use it more broadly for Japan’s stagnation into the 2000s. It is therefore not the name of one trading day; it describes an extended period following the collapse of asset prices.