Which 1989 crash caused Japan’s Nikkei 225 to begin a prolonged decline?

Japan’s asset price bubble burst around 1990, sending the Nikkei 225 into a prolonged decline.

Japanese land and stock prices had risen dramatically during the second half of the 1980s. Easy credit, optimistic expectations, financial deregulation, and speculative buying helped push valuations to extreme levels. The Nikkei 225 reached its record closing high of 38,915.87 on December 29, 1989.

After the Bank of Japan tightened monetary policy, asset prices fell. The Nikkei continued declining, and Japan entered a period of weak growth, banking stress, falling prices, and repeated financial problems often associated with the “Lost Decades.” The stock-market peak came before the broader economic consequences became fully visible.

The crash is sometimes dated simply to 1990 rather than 1989 because the decisive decline unfolded across both years. The “Lost Decade” describes the aftermath, not the bubble itself, and Japan’s economic stagnation extended beyond one calendar decade.