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The impact investing literature largely focuses on private equity investing and overlooks the investments made through debt financing that actually dominate the market. To address this research gap, this paper investigates whether impact financing is associated with financial benefits. By using COVID-19 as an exogenous shock to China's stock market, this paper applies fixed effects panel data analysis with a difference-in-differences research design to provide robust empirical outcomes. The results reveal those financial institutions that better integrated environmental impacts into their financing process experienced positive stock return changes in response to the shock. This study answers the question of how well an impact scales. The findings suggest that impact financing is an effective model, as the impacts incorporated in the debt can be scaled up compared to impact investing funds with low volumes. Impact financing has enormous potential for financial institutions to engage in the green transition since they can derive pecuniary utility while delivering environmental impacts. The revelation of financial benefits also contributes to overcoming the lack of knowledge about impact financing and helps to remove the barriers that advance industry growth. • This paper studies whether impact financing is associated with financial benefits. • Financial firms that better integrate environmental impact in financing have positive stock return changes during COVID-19. • Financial firms can derive pecuniary utility from pursuing impact financing. • The findings suggest that impact financing can be an effective model to bring impact to a substantial scale. [ABSTRACT FROM AUTHOR]