The financial activity measurement uses the financial resilience and economic growth variables in the macroeconomic concept based on financial balance theory as a state of art, the measurement method is built based on the research framework in Fig. 1 below:
Based on the indicators in Fig. 1, testing the model feasibility (basic construct) is the initial process in this study, which will then be tested for variable pressures that influence other variables (snowball effect) on financial resilience and economic growth.
This will then be transmitted into the Ed Waves Index development model, which is a technique for determining pressure development and the movement duration of financial activity waves identified as financial stress, financial activity measurement looks at the financial movements tolerance level in increasing financial resilience and economic growth (α), this measure is shown in the following equation:
α = Ση + Σµ (1)
Equation 1 describes financial activity based on measuring the banking intermediary function (Huang & Luo, 2020; Ajello, 2016). The value of third party funds (η) and lending level (µ) determines how much financial activity reflects financial resilience and economic growth.
Movement Concentration will facilitate Bank Indonesia's financial control over banking which is financial indicators part in determining financial resilience and economic growth to work optimally.
Financial resilience and maximum economic growth determination (α) is determined by measuring the intermediary function relationship in financial movements, the overall financial growth wave can be shown through the following equation:
α = Σ (ρ + ϕ + ω) + Σ(δ + ϒ + ϑ) (2)
Equation 2 provides a more detailed description from Eq. 1, which shows the banking intermediary function involvement in describing financial activity through financial resilience and economic growth.
Through Eq. 2, to measure pressures and patterns of financial activity movement in creating financial resilience and economic growth, an appropriate equation model is needed, which can be shown as follows:
αmax=(((Σρ1<∞)+(Σϕ1<∞)+(Σω1<∞))+((Σδ1<∞)+(Σϒ1<∞)+(Σϑ1<∞))) (3)
Equation 3, the pattern of pressure movement and financial activity shows the highest potential through financial resilience and economic growth, this indication explains that the economy is moving effectively through the variables used.
As a balancing measure in financial activity, a wave measure is developed to express the financial activity normal point, this situation can be represented by the following equation:
αnor=(((Σρ1>0>-1)+(Σϕ1>0>-1)+(Σω1>0>-1))+((Σδ1>0>-1)+(Σϒ1>0>-1)+(Σϑ1>0>-1))) (4)
Equation 4 shows the financial activity movement area that has no effect on financial resilience and economic growth, which is the main part for predicting financial activity further movements (Snowball effect).
An important basis for determining the financial activity conditions that impede the economic growth movement is then measured by the lowest movement area of financial activity, this equation is described as follows:
αmin=(((Σρ-1<∞)+(Σϕ-1<∞)+(Σω-1<∞))+((Σδ-1<∞)+(Σϒ-1<∞)+( Σϑ-1<∞))) (5)
Equation 5 is the financial movement path through financial activities that hinders the economic growth process, which causes a close relationship between financial resilience and economic growth to financial activity.
The relationship between Eq. 2 and financial resilience as well as economic growth in determining financial activity can be compared with the following equation:
β = Σ Ω + Σ Ʊ (6)
As shown in Equations 3 to 5, the measurement results will stimulate financial resilience and economic growth through movements identification in financial activity, as a decomposition of the amount and pattern pressure absorption as shown in the following equation:
β = (Σξ + Σζ + Σς) + (Σσ + Σπ + Σε) (7)
Equation 7 will determine the bank influence when experiencing pressure that changes the wave movement pattern, as a determinant of pressure strength in financial activity movement in Indonesia.
The equation value size will move based on pressure and its own direction through the financial activity interaction on financial resilience and economic growth, the derivative equation is shown as follows:
βmax = (Σξ + Σζ + Σς) 1<∞ + (Σσ + Σπ + Σε) 1<∞ (8)
Equation 8, financial activity moves with strong frequency to support the financial resilience and economic growth pace, the movement consequence causes the financial activity circulation to be faster through positive stimulation from macroeconomic variables.
Long-term relationships strengthen the financial position when there are external pressures such as financial crises or other conditions, which result in changes in financial resilience and economic growth based on the basic point of financial activity movement, the equation is shown as follows:
βnor = (Σξ + Σζ + Σς) 1>0>-1 + (Σσ + Σπ + Σε) 1>0>-1 (9)
Equation 9 clearly shows that the financial activity measurement on financial resilience and economic growth is identified as neutral, even though there is a strong influence from financial elements that affect financial movements.
There are movements that do not stimulate the increasing financial activity effect, but this situation is a point of high sensitivity, because the potential for a decrease in financial resilience and economic growth occurs when financial activity enters that position.
The reduced pressure description on financial resilience and economic growth can trigger a depression in the financial wave, the effect is in the following equation:
βmin= (Σξ + Σζ + Σς) -1<∞ + (Σσ + Σπ + Σε) -1<∞ (10)
Equation 10, financial activity is unstable, there is negative pressure on wave movements, certainty in determining the influence amount received can be measured, in line with determining the financial resilience and economic growth level.
The maintaining financial resilience and economic growth process is not easy, based on standard Bank Indonesia regulations, and applying Bank Indonesia regulations can be done based on equations 1–10.
Measurement perfection is solved by combining each equation (Eq. 1 to 10) using the Ed Waves Index development model, which describes the waves average position with wave contamination in financial activity.
The final model development of financial resilience and economic growth in financial activities, in general, these pressures can be shown in the following equation:
λ = α + β (11)
Equation 11 measuring pressure stages in financial activity through financial resilience and economic growth, pressure collaboration and financial activity wave patterns moving in the same direction as achieving Bank Indonesia's goals and objectives
The measurement results size in Eq. 11 is described as the wave movement basic target, and as the main determinant of the financial behavior impact, the equation is displayed as follows:
λ=(Σ(ρ + ϕ + ω)+Σ(δ + ϒ + ϑ))+((Σξ + Σζ + Σς)+(Σσ + Σπ + Σε)) (12)
Equation 12 is formed if all elements get a balanced portion, and Eq. 12 is changed to be as follows
λ=(√(Σ(ρ + ϕ + ω)+Σ(δ + ϒ + ϑ))+((Σξ + Σζ + Σς)+(Σσ + Σπ + Σε)) / 12) / Σλt-1 (13)
Equation 13 shows clearly identifiable wave development through financial resilience and economic growth paths combination with financial activity, and measurement accuracy will be easier to do.
Financial behavior in Eq. 13 can be classified into various movement areas that determine the pressure amount in financial activity as a measurement result over a certain period.
Based on the wave movement limitations of financial resilience and economic growth, the potential for financial activity can be classified on the pressure aspect exerted, this can be measured through the following equation:
λmax=((Σ(ρ + ϕ + ω)1<∞+Σ(δ + ϒ + ϑ)1<∞)+((Σξ + Σζ + Σς) 1<∞+(Σσ + Σπ + Σε) 1<∞))2 / 12 / Σ (λ1<∞)t-1 (14)
The pressure description on financial resilience, economic growth and the wave rate in Eq. 14, shows the wave point and direction in a positive proportion, financial activity is responded positively with financial implications on the economic growth optimal level accompanied by maximum financial resilience.
The shifting tide occurred in line with the pressure pace on financial resilience and economic growth, which resulted in changes in financial activity position and pressure waves, this can be seen in the following equation:
λnor=((Σ(ρ + ϕ + ω)1>0>-1+Σ(δ + ϒ + ϑ)1>0>-1)+((Σξ + Σζ + Σς) 1>0>-1+(Σσ + Σπ + Σε)1>0>-1))2/12/Σ(λ1>0>-1)t-1 (15)
The pressure and wave rate in Eq. 15 is a strong shift when financial activity is unprofitable even within flexible limits, however, changes in the financial activity character resulted in economic growth not receiving stimulus and stagnant financial stability.
The long-term impact of economic pressures and financial stagnation will push a wave of financial resilience and economic growth into a negative area due to a slowdown in financial activity, this relationship is described by the following equation:
λmin=((Σ(ρ + ϕ + ω)-1<∞+Σ(δ + ϒ + ϑ)-1<∞)+((Σξ + Σζ + Σς)-1<∞+(Σσ + Σπ + Σε) -1<∞))2/12/Σ(λ-1<∞)t-1 (16)
The financial resilience and economic growth contamination on financial activity in Eq. 16 causes a decrease in financial quality in the measurement period, and driving financial resilience and economic growth waves to point and direction wave that is less conducive due to sluggish financial activity.
Therefore, the measurements expansion in Eq. 11 can place the state finances weight, besides that it can predict financial activity by identifying wave movements that can stimulate financial resilience and optimal economic growth.
The equation shown is a basic reference in Central Bank policy, because the measurement is based on financial activities which are part of monetary policy elements, especially in achieving the final target previously set.