Which investment bubble burst in Japan in 1990, beginning a prolonged stock-market collapse?

Japan’s Japanese asset price bubble burst in 1990, beginning a prolonged stock-market collapse.

During the late 1980s, Japanese share and land prices rose to extraordinary levels. The Nikkei 225 reached its historic closing peak of 38,915.87 on December 29, 1989. After monetary tightening and other policy changes, asset prices fell, and the stock-market decline accelerated in 1990.

The collapse damaged banks and companies because many loans were secured by inflated land values. Nonperforming loans accumulated, credit weakened, and Japan entered a long period of slow growth often called the Lost Decades. The Nikkei did not regain its 1989 closing peak until 2024.

The event is often described simply as a stock crash, but it was a combined bubble in equities and real estate. It also differs from Japan’s 1987 global crash exposure: the major domestic peak and subsequent structural downturn centered on the bubble that topped out around the end of 1989.