Japan’s stock-market crash followed the bursting of its enormous asset-price bubble around 1990.
During the late 1980s, Japanese share and land prices rose to extraordinary levels. The Nikkei 225 reached its peak near 39,000 points at the end of 1989, while land in major cities was valued at exceptionally high prices.
The Bank of Japan tightened monetary policy, and asset prices began falling. The Nikkei lost much of its value during the 1990s, while banks struggled with bad loans backed by declining property. The resulting period became known as the Lost Decade, although Japan’s economic stagnation lasted beyond the 1990s.
The crash is often confused with the 1997 Asian financial crisis. Japan’s bubble burst earlier and developed from domestic asset speculation, whereas the 1997 crisis began with pressure on Thailand’s currency and spread across several Asian economies.