The Japanese stock index that crashed after the country’s asset-price bubble burst in 1990 was the Nikkei 225.
The Nikkei had reached an intraday record of 38,957.44 on December 29, 1989. Japan’s stock and property prices had risen dramatically during the 1980s, supported by easy credit and powerful expectations of continued appreciation. The Bank of Japan tightened monetary policy, and the bubble began to deflate around the start of the 1990s.
The Nikkei then entered a prolonged decline. Falling asset values weakened banks and borrowers, while nonperforming loans weighed on the financial system. Japan experienced a long period of slow growth and deflation often called the “Lost Decades,” although the exact period covered by that label varies.
The Nikkei 225 is a price-weighted index of 225 companies listed on the Tokyo Stock Exchange. TOPIX is a different Japanese index, weighted by market capitalization, so the two names should not be treated as interchangeable when discussing the bubble’s peak and aftermath.