Which Japanese asset-price bubble burst in 1990, beginning a prolonged stock-market and real-estate collapse?

The Japanese asset-price bubble burst in 1990, beginning a prolonged stock-market and real-estate collapse.

During the late 1980s, prices of Japanese shares and land rose dramatically. Easy credit, optimistic expectations, and financial deregulation encouraged borrowing and speculation. The Nikkei 225 reached an intraday high of 38,957.44 on December 29, 1989.

The Bank of Japan tightened monetary policy, and asset prices then began to fall. The Nikkei lost much of its value during the early 1990s, while banks were left with large quantities of bad loans secured by declining property. Japan experienced years of weak growth, deflationary pressure, and financial-sector restructuring.

The phrase “lost decade” is commonly used for the 1990s, although economic and financial difficulties extended beyond that decade. This episode is different from the 1987 global stock-market crash, which was a rapid international equity sell-off rather than the bursting of Japan’s property and share-price bubble.