Japan experienced the 1989 crash that ended the speculative boom in its stock and property markets.
Japan’s asset-price bubble developed during the second half of the 1980s. Easy credit, optimistic expectations, financial deregulation, and rapid lending helped push share and land prices to extraordinary levels. The Nikkei 225 reached its record closing peak at the end of December 1989.
After the Bank of Japan raised interest rates and credit conditions tightened, the bubble began to deflate. The Nikkei fell heavily in 1990, while real-estate prices continued declining for much longer. Banks were left with bad loans, and companies and households reduced borrowing and spending.
This event is sometimes described as a single crash, but the economic damage unfolded over many years. It also differs from the 1997 Asian financial crisis, which began with pressure on Thailand’s baht and spread across several emerging Asian economies. Japan’s episode began with the collapse of its own domestic asset bubble.