Japan’s stock-market bubble burst in 1990, beginning the era known as the Lost Decades.
Japan experienced a major asset-price boom during the second half of the 1980s. The Nikkei 225 reached its historical peak of 38,957.44 on December 29, 1989. Land and share prices had risen dramatically, supported by easy credit and strong optimism about Japan’s economy.
The Bank of Japan tightened monetary policy, and asset prices began to fall. The Nikkei lost much of its value during the early 1990s, while banks were left with bad loans secured by declining property. Weak demand, deflation, and slow financial repair then restricted growth.
The phrase Lost Decades usually refers to Japan’s prolonged economic stagnation from the 1990s into the 2000s, although scholars differ about the exact endpoint and whether later years should be counted. The stock crash was one part of a broader collapse in both equity and real-estate valuations.