Which Japanese asset bubble burst in the early 1990s, beginning a prolonged stock-market decline?

The Japanese asset price bubble burst in the early 1990s, beginning a prolonged stock-market decline.

During the late 1980s, Japanese share and property prices rose dramatically. Easy credit, optimistic expectations, and financial deregulation helped push asset valuations to extraordinary levels. The Nikkei 225 reached its record closing level of 38,915.87 on December 29, 1989.

The Bank of Japan raised interest rates and credit conditions tightened. Property prices then fell, and stock prices followed. The Nikkei lost much of its value during the early 1990s, while banks struggled with nonperforming loans secured by depreciating real estate.

The resulting period is often called Japan’s “Lost Decade,” although economic weakness and financial repair extended beyond the 1990s. The bubble is sometimes confused with Japan’s later deflation or with the 1987 global crash. Those were related parts of the wider story, but the Japanese asset price bubble specifically refers to the late-1980s surge and its collapse.