Japan’s stock-market bubble burst in 1990 after extraordinary speculation in property and equities. During the late 1980s, Japanese land and share prices rose dramatically, supported by easy credit, optimistic expectations, and a belief that asset values would continue climbing.
The Nikkei 225 reached its peak of 38,915.87 on December 29, 1989. Japanese authorities then tightened monetary policy, and the property and stock markets began falling. The Nikkei continued declining after 1990, while banks were left with large volumes of bad loans secured by assets whose values had collapsed.
The resulting economic stagnation became associated with Japan’s “Lost Decades.” The phrase commonly refers to the prolonged period of weak growth, deflationary pressure, financial repair, and low investment that followed the bubble’s collapse.
The 1990 date identifies the beginning of the market crash, not the end of the entire downturn. Japan’s experience is also distinct from the later Asian financial crisis of 1997, which began elsewhere and involved currency and banking shocks across several economies.