Which Japanese asset-price bubble burst in 1990, beginning a prolonged stock-market and property decline?

The Japanese asset-price bubble that burst in 1990, beginning a prolonged stock-market and property decline, was the Japanese asset price bubble.

During the late 1980s, Japan experienced extraordinary increases in land and share prices. Easy credit, optimistic expectations, and financial deregulation encouraged speculation. The Nikkei 225 reached an all-time closing high of 38,915.87 on December 29, 1989.

The Bank of Japan raised interest rates and took steps to restrain credit as concerns about overheating grew. Asset prices then fell dramatically. The Nikkei lost much of its value, while commercial and residential land prices also declined. Banks were left with large volumes of non-performing loans.

Japan’s subsequent period of weak growth and financial repair is often called the “Lost Decades.” The bursting bubble did not produce one single trading-day crash like 1987; it was a long unwinding of inflated asset values, followed by banking and economic problems.