The country whose asset-price bubble burst in the early 1990s after a huge 1980s boom was Japan.
Japanese land and stock prices rose dramatically during the late 1980s, supported by easy credit, financial speculation, and strong economic confidence. The Nikkei 225 reached an all-time 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 collapse damaged banks and companies because many loans were secured by land or linked to inflated asset values. Japan subsequently experienced weak growth, falling prices, banking problems, and repeated stimulus efforts. The prolonged period is often called Japan’s “lost decades,” although the timing and definition of that phrase vary.
The crisis was not a single one-day stock-market crash. It was the bursting of intertwined equity and real-estate bubbles, followed by a long financial and economic adjustment.