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Japanese Asset Price Bubble Overview

The Japanese asset price bubble was an economic phenomenon from 1986 to 1991 characterized by inflated real estate and stock market prices, which ultimately burst in early 1992 leading to a prolonged economic stagnation known as the Lost Decade. The bubble was fueled by excessive monetary easing, speculation, and government policies that encouraged credit expansion and asset marketability. The aftermath included significant declines in asset prices, accumulation of non-performing loans, and challenges for financial institutions, with a recovery in land prices only beginning in 2018.

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32 views6 pages

Japanese Asset Price Bubble Overview

The Japanese asset price bubble was an economic phenomenon from 1986 to 1991 characterized by inflated real estate and stock market prices, which ultimately burst in early 1992 leading to a prolonged economic stagnation known as the Lost Decade. The bubble was fueled by excessive monetary easing, speculation, and government policies that encouraged credit expansion and asset marketability. The aftermath included significant declines in asset prices, accumulation of non-performing loans, and challenges for financial institutions, with a recovery in land prices only beginning in 2018.

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Med HubPH
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© © All Rights Reserved
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Contents

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Background


Timeline


Identification
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Asset prices

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Stock prices

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Money supply and credit


Causes
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The Plaza Accord

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Financial liberalization

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Monetary policy

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Distortions in the tax system

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The land lease law

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Changes in bank behaviour


Aftermath
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Asset price

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Corruption

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Household impact

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Corporate impact

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Financial and banking sector

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The lost decade


Government policy
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Government spending

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Zero interest-rate policy


Media


Notes


References


External links

Japanese asset price bubble


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From Wikipedia, the free encyclopedia

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The Japanese asset price bubble (バブル景気, baburu keiki, lit. 'bubble economy') was
an economic bubble in Japan from 1986 to 1991 in which real estate and stock market
prices were greatly inflated.[1] In early 1992, this price bubble burst and
Japan's economy stagnated. The bubble was characterized by rapid acceleration of
asset prices and overheated economic activity, as well as an uncontrolled money
supply and credit expansion.[2] More specifically, over-confidence
and speculation regarding asset and stock prices were closely associated with
excessive monetary easing policy at the time.[3] Through the creation of economic
policies that cultivated the marketability of assets, eased the access to credit, and
encouraged speculation, the Japanese government started a prolonged and
exacerbated Japanese asset price bubble.[4]

By August 1990, the Nikkei stock index had plummeted to half its peak by the time of
the fifth monetary tightening by the Bank of Japan (BOJ).[2] By late 1991, other asset
prices began to fall. Even though asset prices had visibly collapsed by early 1992,[2] the
economy's decline continued for more than a decade. This decline resulted in a huge
accumulation of non-performing assets loans (NPL), causing difficulties for many
financial institutions. The bursting of the Japanese asset price bubble contributed to
what many call the Lost Decade.[5] Japan's average nationwide land prices finally began
to increase year-over-year in 2018, with a 0.1% rise over 2017 price levels.[6]
Nikkei 225 Index

Japan property prices (year over year)

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