Japanese financial crisis

The Japanese financial crisis of the early 1990s was triggered by a bursting asset bubble, mainly in real estate and stocks, which had been inflated during the 1980s. When asset prices collapsed, banks faced huge losses because many loans had been made against inflated collateral. This led to a credit crunch, causing economic stagnation and deflation. The government responded with bailouts and policy measures, but recovery was slow, resulting in what’s known as Japan’s "Lost Decade," characterized by economic stagnation, high debt levels, and sluggish growth that persisted into the 2000s.