Japan’s stock market experienced the 1989 collapse of the Nikkei after its asset-price bubble burst. The Nikkei 225 reached a record closing peak on December 29, 1989, then entered a prolonged decline as Japan’s speculative boom unraveled.
During the late 1980s, Japanese land and equity prices rose dramatically, supported by easy credit, optimistic expectations, and strong corporate and financial-sector activity. When monetary policy tightened and asset prices began falling, banks were left with troubled loans and borrowers faced declining collateral values.
The consequences extended well beyond the stock exchange. Japan experienced slow growth, banking problems, deflationary pressure, and what became known as the lost decade, although the economic stagnation lasted beyond the 1990s. The episode is often compared with later property and credit bubbles because it shows how a market crash can interact with a banking system for many years.