In a previous article, \cite{Zill3}, we have established linear inviscid damping for a large class of monotone shear flows in a finite periodic channel and have further shown that boundary effects asymptotically lead to the formation of singularities of derivatives of the solution. As the main results of this article, we provide a detailed description of the singularity formation and establish stability in all sub-critical fractional Sobolev spaces and blow-up in all super-critical spaces. Furthermore, we discuss the implications of the blow-up to the problem of nonlinear inviscid damping in a finite periodic channel, where high regularity would be essential to control nonlinear effects.