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Japanese asset price bubble
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The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. By August , the Nikkei stock index had plummeted to half its peak by the time of the fifth monetary tightening by the Bank of Japan BOJ. Even though asset prices had visibly collapsed by early , [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. Early research has found that the rapid increase in Japanese asset prices was largely due to the delayed action by the BOJ to address the issue.
