Japan was the country whose 1989 asset-price collapse marked the beginning of the Japanese asset price bubble crash.
Japan’s stock and property prices had surged during the 1980s. Easy credit, optimistic expectations, and intense speculation pushed valuations to extraordinary levels. The Nikkei 225 reached its record closing high of 38,915.87 on December 29, 1989.
The Bank of Japan then tightened monetary policy, and asset prices began to fall. The Nikkei continued declining through the early 1990s, while property values also collapsed. Banks were left with large amounts of non-performing loans, and the economy entered a prolonged period of weak growth often called the “Lost Decades.”
The event is sometimes described simply as a stock crash, but it was a combined equity and real-estate collapse. Japan’s experience became a major case study in how credit-fueled bubbles can damage banks and the wider economy long after prices stop falling.