Which 1989 Japanese asset-price collapse began the long period called the Lost Decades?

Japan’s late-1980s asset-price collapse was the bursting of the Japanese asset price bubble, which preceded the Lost Decades.

Japanese property and stock prices rose dramatically during the 1980s. The Nikkei 225 reached an intraday peak of 38,957.44 on December 29, 1989. Tighter monetary policy and other financial pressures then helped end the boom, and asset prices fell sharply during the early 1990s.

The collapse weakened banks because many loans were secured by inflated property values. Japan experienced prolonged slow growth, deflationary pressure, nonperforming loans, and repeated financial difficulties. The extended period is widely known as the Lost Decades, although scholars debate its precise starting and ending dates.

The bubble was not only a stock-market phenomenon. Land prices, bank credit, corporate borrowing, and speculation were closely connected, making the subsequent adjustment broader and more persistent than a normal equity correction.