The “shadow banking” technology uses less capital and manufactures safety by, instead, giving repo investors collateral and the right to seize the collateral on a moment’s notice. So shadow banking money is much more run prone than bank money.
Given its relatively stable nature, the banking model is better suited to investing in assets that are illiquid and subject to interim price volatility – that is, to fire-sale risk. These assets can be loans that involve significant amounts of monitoring, or they can be securities that require less monitoring.