This paper presents an analytical approach to explore the damping effect of inner loops on grid-forming converters. First, an impedance model is proposed to characterize the behaviors of inner loops, thereby illustrating their influence on output impedance shaping. Then, based on the impedance representation, the complex torque coefficient method is employed to assess the contribution of inner loops to system damping. The interactions among inner loops, outer loops, and the ac grid are analyzed. It reveals that inner loops shape the electrical damping torque coefficient and consequently influence both synchronous and sub-synchronous oscillation modes. The virtual admittance and current control-based inner-loop scheme is employed to illustrate the proposed analytical approach. The case study comprises the analysis of impedance profiles, the analysis of damping torque contributed by inner loops under various grid strengths, and the comparison between dq-frame and αβ-frame realizations of inner loops. Finally, simulation and experimental tests collaborate with theoretical approaches and findings.