Japan’s stock exchange crash in 1920 helped trigger the postwar financial crisis known as the 1920–21 depression.
After World War I, Japan experienced a speculative boom in prices for commodities and financial assets. When demand weakened and speculation reversed in 1920, stock and commodity prices fell. The downturn exposed fragile loans held by banks and businesses, particularly those connected to wartime industries and trade.
The resulting crisis is often called the Shōwa financial crisis in discussions of Japan’s later banking history, although the main 1920 downturn preceded the Shōwa era, which began in 1926. Japanese banks faced bad debts, and the economic weakness continued into the early 1920s. The episode demonstrated how a financial-market decline could spread through credit and industry.
This event is distinct from Japan’s 1927 banking crisis and from the asset-price collapse beginning in 1990. Those later crises had different causes and occurred in different economic and political settings.