Japan experienced the 1989 bursting of the speculative asset-price bubble that led to a prolonged stock-market crash.
Japanese land and share prices rose dramatically during the second half of the 1980s. Easy credit, strong optimism, and expectations that land values would keep increasing helped drive speculation. The Nikkei 225 reached its historical closing peak on December 29, 1989, at 38,915.87.
The bubble then burst as monetary policy tightened and asset prices fell. Banks were left with bad loans secured by depreciating property and shares, while households and businesses reduced spending and investment. Japan entered a long period of weak growth and deflation commonly called the Lost Decades.
The Nikkei’s 1989 peak is often confused with the broader bubble’s earlier property-price milestones. The crisis was also not an overnight stock-market event: the equity decline unfolded over years, and the banking and economic consequences continued well into the 1990s and beyond.