<p>ASSET PRICING THEORY:</p>

<ul>
<li><p>Cochrane, <em>Asset Pricing</em> is a good book in that it displays the way that hard-core asset pricers see the world.  </p></li>
<li><p>Huang and Litzenberger, <em>Foundations for Financial Economics</em> is said to be the most solid, if a bit outdated, textbook.</p></li>
</ul>

<p>CORPORATE FINANCE THEORY:</p>

<ul>
<li>Tirole, <em>The Theory of Corporate Finance</em>, has they key insights for about half the literature. A chapter per month would make you a very solid corporate finance economist. The other Tirole books contain about 90% of the rest of non-asset pricing stuff.</li>
</ul>

<p>STATE OF THE LITERATURE:</p>

<p>The textbooks often lag way behind what people are writing about in their papers, for good or bad. They also represent one particular view. There are a bunch of so-called Handbooks(mostly by Elsevier) that are a good way to get a broad sense of the key questions, authors, methods, issues. I would look at the financial economics, financial intermediation, banking, finance, handbooks. </p>

CC BY-SA 3.0
2016-05-05T02:42:03.153Z
Thanks, I actually already purchased the Cochrane book, so I'm glad to hear it is good! I have not had a chance to look at it yet.
DornerA
CC BY-SA 3.0
2016-05-04T17:01:54.803Z
2016-05-05T03:12:59.977Z
2016-05-05T03:12:59.977Z
Fix.B.
<p>The recommended books are decent. From these two I'd go with Bailey first and if you're comfortable with that, then LeRoy &amp; Werner. The latter requires some background in linear algebra and optimization theory.</p>

<p>If you want to study some econometric applications for financial economics, you might try:</p>

<ul>
<li>Cuthbertson &amp; Nitzsche: Quantitative Financial Economics: Stocks, Bonds and Foreign Exchange </li>
<li>Campbell, Lo &amp; MacKinlay: The Econometrics of Financial Markets</li>
</ul>

CC BY-SA 3.0
2016-03-24T13:25:27.430Z
Hi. These are nice recommendations. Maybe you could separate each of them into separate answers so people can vote on them individually -- See http://meta.economics.stackexchange.com/questions/169/consensus-on-list-questions for some guidelines on answering list questions.
cc7768
CC BY-SA 3.0
2016-03-24T06:06:27.583Z
2016-03-24T06:06:27.583Z
John L.
<p>I have an interest in financial economics, and I plan to take the graduate sequence, however I did not take an undergraduate course in that field. I would really appreciate it if someone could recommend a textbook for financial economics. I would prefer the book involved calculus, so I can get the fundamentals of problems (such as asset pricing) I may see in the future.</p>

<p>Two books which have been recommended to me are: "The Economics of Financial Markets" by Roy E. Bailey and "Principles of Financial Economics" by LeRoy and Werner. Are either of these worth reading?</p>

<reference-request><financial-economics><asset-pricing><financial-markets>
Financial Economics Textbooks
DornerA
# Financial Economics Textbooks

(Asked by: username_0 on 2016-03-24)

I have an interest in financial economics, and I plan to take the graduate sequence, however I did not take an undergraduate course in that field. I would really appreciate it if someone could recommend a textbook for financial economics. I would prefer the book involved calculus, so I can get the fundamentals of problems (such as asset pricing) I may see in the future.

Two books which have been recommended to me are: "The Economics of Financial Markets" by Roy E. Bailey and "Principles of Financial Economics" by LeRoy and Werner. Are either of these worth reading?

**Tags:** reference-request, financial-economics, asset-pricing, financial-markets


---

## 2 answers

### Answer by username_2 on 2016-03-24. Score: 7 | Accepted answer

The recommended books are decent. From these two I'd go with Bailey first and if you're comfortable with that, then LeRoy & Werner. The latter requires some background in linear algebra and optimization theory.

If you want to study some econometric applications for financial economics, you might try:

* Cuthbertson & Nitzsche: Quantitative Financial Economics: Stocks, Bonds and Foreign Exchange
* Campbell, Lo & MacKinlay: The Econometrics of Financial Markets

> **Comments:**
> **username_3**: Hi. These are nice recommendations. Maybe you could separate each of them into separate answers so people can vote on them individually -- See http://meta.economics.stackexchange.com/questions/169/consensus-on-list-questions for some guidelines on answering list questions.  

---

### Answer by username_1 on 2016-05-04. Score: 4

ASSET PRICING THEORY:

* Cochrane, *Asset Pricing* is a good book in that it displays the way that hard-core asset pricers see the world.
* Huang and Litzenberger, *Foundations for Financial Economics* is said to be the most solid, if a bit outdated, textbook.

CORPORATE FINANCE THEORY:

* Tirole, *The Theory of Corporate Finance*, has they key insights for about half the literature. A chapter per month would make you a very solid corporate finance economist. The other Tirole books contain about 90% of the rest of non-asset pricing stuff.

STATE OF THE LITERATURE:

The textbooks often lag way behind what people are writing about in their papers, for good or bad. They also represent one particular view. There are a bunch of so-called Handbooks(mostly by Elsevier) that are a good way to get a broad sense of the key questions, authors, methods, issues. I would look at the financial economics, financial intermediation, banking, finance, handbooks.

> **Comments:**
> **username_0**: Thanks, I actually already purchased the Cochrane book, so I'm glad to hear it is good! I have not had a chance to look at it yet.  

---

