Japan’s asset-price bubble burst in 1990 after extraordinary land and stock valuations.
During the late 1980s, Japanese share and property prices rose rapidly amid easy credit, optimistic expectations, and aggressive lending. The Nikkei 225 reached its record closing level of 38,915.87 on December 29, 1989. The Bank of Japan then tightened monetary policy, and asset prices began falling soon afterward.
The decline became a prolonged financial and economic slump. Banks were left with large volumes of bad loans, while companies and households reduced borrowing and investment. The period is often called Japan’s “Lost Decades,” although the timing and economic effects varied across sectors and years.
The bubble is sometimes remembered as a stock-market crash alone, but land prices were equally important. Japan’s experience also differed from the 1987 global stock crash: its collapse developed into a long balance-sheet recession rather than a brief worldwide market shock.