Which Japanese asset bubble burst in 1990, beginning Japan’s long stock-market and property crash?

The Japanese asset price bubble burst in 1990, beginning Japan’s long stock-market and property crash. During the late 1980s, land and share prices rose far beyond levels supported by ordinary economic earnings.

Easy credit, optimistic expectations, and financial deregulation helped drive the boom. The Nikkei 225 reached its peak of 38,957.44 on December 29, 1989. The Bank of Japan then tightened monetary policy, and falling confidence caused both equity and real-estate prices to reverse.

The collapse damaged banks because many loans had been secured by assets whose values were falling. Japan experienced weak growth, banking problems, deflationary pressure, and repeated market setbacks during what became known as the Lost Decades. The Nikkei did not regain its 1989 closing peak until 2024.

The episode is not the same as Japan’s 1987 Black Monday reaction or the global 2008 financial crisis. It is also often described simply as Japan’s bubble economy, although the property and stock markets were closely connected.