What was the name of Japan’s stock-market peak and collapse that began in 1989?

Japan’s stock-market peak and collapse that began in 1989 is known as the Japanese asset price bubble.

Japan’s Nikkei 225 reached its record closing level of 38,915.87 on December 29, 1989. The boom had lifted both share and land prices, supported by easy credit, optimistic expectations, and financial speculation. After the Bank of Japan tightened policy, asset prices began to fall. The decline damaged banks, companies, and households that had relied on inflated collateral values.

The prolonged economic stagnation that followed is commonly associated with Japan’s Lost Decades. Nonperforming loans weakened the banking system, while falling demand and deflation made recovery difficult. The Nikkei remained far below its 1989 peak for many years.

A common mix-up is using “Lost Decade” as the name of the bubble itself. The bubble describes the late-1980s asset boom and its collapse; the Lost Decades describe the long economic aftermath. Japan’s episode also differs from the 1997 Asian financial crisis, which affected several economies across the region.