Japan’s stock-market collapse in 1990 began the long decline known as the Lost Decade. The country’s asset-price bubble had pushed Japanese shares and land values to exceptionally high levels during the late 1980s.
The Nikkei 225 reached its record closing level of 38,915.87 on December 29, 1989. After the Bank of Japan tightened monetary policy and credit conditions changed, stock and property prices fell sharply. The Nikkei continued declining into the early 1990s, while banks struggled with bad loans and companies reduced investment.
The phrase Lost Decade originally described Japan’s economic stagnation during the 1990s, although later writers extended it to cover additional weak-growth years. It was not simply a stock-market event: the collapse of property prices, banking problems, deflation, and weak demand all contributed to the prolonged downturn.