Which Japanese financial bubble burst after the Nikkei 225 reached its record close on 29 December 1989?

The Japanese financial bubble that burst after the Nikkei 225 reached its record close on 29 December 1989 was the Japanese asset price bubble.

During the late 1980s, Japanese land and share prices rose dramatically amid easy credit, strong corporate investment, and widespread confidence in continued economic growth. The Nikkei 225 reached 38,915.87 at the end of 1989. The Bank of Japan then tightened monetary policy, and asset prices began to fall.

The decline developed into a prolonged financial and economic crisis rather than a single day of global panic. Banks were left with bad loans, real-estate collateral lost value, and Japanese companies reduced borrowing and investment. The following decades are often called Japan’s “Lost Decades.”

A common mix-up is to call the event simply the Nikkei crash. The broader term refers to the speculative boom and its collapse in both equity and real-estate markets, while the Nikkei was the most visible stock-market measure.