Explain what happens in an economy when the financial markets limit access to capital. How does this affect economic growth and employment?

Financial Market : Where sale and get of securities, bonds and other instruments happen.

The financial market helps in flow of savings and investment within the economy. If the financial market limit access to capital, it'll be difficult to boost the money from the marketplace for firms and households. People who want to begin and expand their business they're going to not get loans. Households won't get loans for purchasing houses, cars and other goods of import. Hence demand within the economy reduces as we all know credit increases the purchasing capacity which increases demand and to satisfy demand, supply increases. This affects the expansion and employment to a bigger extent because expansion and creation of business not happening, demand is a smaller amount which lead to less production and hence employment reduces.