Which Japanese asset-price bubble burst in the early 1990s, ushering in Japan’s Lost Decades?

The Japanese asset-price bubble burst in the early 1990s, ushering in Japan’s Lost Decades.

During the late 1980s, Japanese property and share prices rose to extraordinary levels amid easy credit, financial deregulation, and strong economic confidence. The Nikkei 225 reached its historical closing peak of 38,915.87 on December 29, 1989. Property prices also became highly inflated, especially in major urban areas.

The Bank of Japan tightened policy, and asset prices began falling. Banks were left with large volumes of bad loans, while households and companies reduced borrowing and spending. The resulting stagnation, deflationary pressure, and banking problems persisted for years. “Lost Decades” usually refers to Japan’s prolonged economic weakness from the 1990s onward, not simply the stock-market crash itself. The bubble’s peak also predates the 1997 Asian financial crisis, which affected Japan and other economies separately.