Explain duration GAP analysis in banks. Calculate the duration Gap of the following excerpts from the balance sheet of a bank. Also calculate the impact on the equity of the bank in the different interest rates scenarios.

Scenarios for Impact analysis:

1. Interest rates increased by 1%

2. Interest rates decreased by 1%

The answer should be a min of 700 words

for Balance Sheet Hypothetical Bank Particulars Assets Duration Liabiliti Liabilities Duration Current Liabilities 7 years 700 5 Years Current Assets Fixed Assets 1000 300 Other Liab. 300 300 1300 1300