Which Japanese asset-price collapse began in 1990 after the country’s late-1980s stock and property bubble?

The Japanese asset-price collapse that began in 1990 after the late-1980s stock and property bubble is the Japanese asset price bubble’s collapse.

During the second half of the 1980s, Japanese share and land prices rose to extraordinary levels. Easy credit, optimistic expectations, financial deregulation, and speculative borrowing helped push asset valuations far above levels supported by ordinary economic income. The Nikkei 225 reached an all-time closing high of 38,915.87 on December 29, 1989.

The Bank of Japan tightened monetary policy, and asset prices began falling. The Nikkei lost much of its value during 1990, while land prices continued declining for years. Banks were left with large volumes of bad loans secured by assets whose values had collapsed.

The prolonged aftermath became associated with Japan’s “Lost Decades,” though the exact dating and causes of that period are debated. The bubble’s collapse was not the same event as the 1997 Asian financial crisis, which began later and affected several neighboring economies. Japan’s experience remains a major example of how a burst credit and property bubble can damage banks, investment, and growth for many years.