Japan’s 1989 stock-market crash followed the bursting of its late-1980s asset-price bubble.
During the second half of the 1980s, Japanese share and land prices rose dramatically. The Nikkei 225 reached its record closing level of 38,915.87 on December 29, 1989. After monetary policy tightened and speculative enthusiasm faded, Japanese asset prices began a prolonged decline.
The collapse damaged banks because many loans had been secured by land and other assets whose values fell sharply. Companies and households reduced borrowing and spending, contributing to years of weak growth and deflationary pressure. The period is widely associated with Japan’s “Lost Decades.”
The crash was not a single day comparable to the 1987 Black Monday. It was the beginning of a long unwinding of an asset bubble, and the Nikkei’s later performance reflected continuing banking and economic problems.