Which Japanese asset-price bubble burst at the start of the country’s 1990s stock-market crash?

The Japanese asset price bubble burst at the start of the country’s 1990s stock-market crash. During the late 1980s, Japanese share and land prices rose to extraordinary levels, supported by easy credit, financial optimism, and strong economic growth.

The Nikkei 225 reached its historical peak of 38,957.44 on December 29, 1989. After the Bank of Japan tightened monetary policy and credit conditions changed, asset prices began falling. The Nikkei’s decline continued through the early 1990s and contributed to a prolonged period of weak growth and financial stress.

The phrase Japanese asset price bubble covers both the equity and real-estate booms. It is not simply another name for the later stock-market decline. The bubble’s collapse affected banks because land and shares were important collateral for loans.

Japan’s experience is often discussed in relation to balance-sheet recession, deflation, nonperforming loans, and the difficulty of restoring demand after a leveraged asset boom ends.