A total of 151 global financial institutions, including investment, insurance and asset management companies, have provided loans and financial services to firms that produce cluster munitions, a report from PAX claims.
Entitled 'Worldwide Investments in Cluster Munitions: a shared responsibility', the report alleges that the companies provided $27bn to companies involved in cluster munition production between 2011 and 2014.
PAX, a Netherlands-based peace and security group, said the loans from financial institutions to cluster munitions manufacturers have reportedly increased from $2.3bn in 2013 to $4.5bn this year.
Nearly 76 financial institutions from the US have made their way into the group's 2014 Hall of Shame list of investors for cluster munitions producers.
US banking giant JPMorgan Chase tops the list, along with Singapore-based Temasek and China Everbright Group.
Firms from 14 countries, including Australia, Canada, China, France, Germany, India, Israel, Japan, Singapore, South Korea, Spain, Switzerland, Taiwan, and the UK, are also on the list.
Report co-author Suzanne Oosterwijk said: "It is an absolute scandal that so-called leading banks and asset managers are investing billions into companies that produce weapons, which are banned under international law.
"This year alone, civilians in Syria and eastern Ukraine were killed and maimed by these weapons.
"We call on these companies to stop funding the indiscriminate killing of civilians by ending these investments.
"We also urge governments that have joined the global ban to install national disinvestment legislation."
International Cluster Munition Coalition campaign manager Amy Little said: "94% of recorded cluster munition victims are civilians and 40% are children, which begs the question why any financial institution would choose to fund producers of this banned weapon."
Cluster munitions contain submunitions in a container such as a rocket or a bomb and are designed to explode on hitting the ground. They spread indiscriminately over a wide area, putting both combatants and civilians at risk.
Several submunitions do not explode on contact, but remain armed, becoming de facto landmines that remain hazardous until cleared.
The use of cluster bombs, like landmines, is banned under international law and they are currently being phased out of several military stockpiles worldwide.
Image: An unexploded ZP-39 submunition left from an apparent cluster munition attack by Islamic State in the town of Kobani near Syria's border with Turkey. Photo: © 2014 Private.