diff --git a/bigchaindb/db/utils.py b/bigchaindb/db/utils.py
index f3f4f5c7..d5551833 100644
--- a/bigchaindb/db/utils.py
+++ b/bigchaindb/db/utils.py
@@ -10,6 +10,7 @@ from bigchaindb import exceptions
 
 logger = logging.getLogger(__name__)
 
+
 def get_conn():
     '''Get the connection to the database.'''
 
@@ -26,11 +27,7 @@ def init():
 
     logger.info('Create:')
     logger.info(' - database `%s`', dbname)
-    try:
-        r.db_create(dbname).run(conn)
-    except r.ReqlOpFailedError as e:
-        logger.info(e.message)
-        return
+    r.db_create(dbname).run(conn)
 
     logger.info(' - tables')
     # create the tables
@@ -81,7 +78,7 @@ def drop(assume_yes=False):
             logger.info('Drop database `%s`', dbname)
             r.db_drop(dbname).run(conn)
             logger.info('Done.')
-        except r.ReqlOpFailedError as e:
-            logger.info(e.message)
+        except r.ReqlOpFailedError:
+            raise exceptions.DatabaseDoesNotExist('Database `{}` does not exist'.format(dbname))
     else:
         logger.info('Drop aborted')
diff --git a/bigchaindb/exceptions.py b/bigchaindb/exceptions.py
index 964daefe..684ae58c 100644
--- a/bigchaindb/exceptions.py
+++ b/bigchaindb/exceptions.py
@@ -22,3 +22,6 @@ class InvalidSignature(Exception):
 class DatabaseAlreadyExists(Exception):
     """Raised when trying to create the database but the db is already there"""
 
+class DatabaseDoesNotExist(Exception):
+    """Raised when trying to delete the database but the db is not there"""
+
diff --git a/tests/db/conftest.py b/tests/db/conftest.py
index e0c92e70..438f30e5 100644
--- a/tests/db/conftest.py
+++ b/tests/db/conftest.py
@@ -25,8 +25,6 @@ def setup_database(request):
         r.db_create('bigchain_test').run()
     except r.ReqlOpFailedError as e:
         if e.message == 'Database `bigchain_test` already exists.':
-            print(e.message)
-            print('Deleting `bigchain_test` database.')
             r.db_drop('bigchain_test').run()
             r.db_create('bigchain_test').run()
         else:
@@ -52,7 +50,12 @@ def setup_database(request):
     def fin():
         print('Deleting `bigchain_test` database')
         get_conn().repl()
-        r.db_drop('bigchain_test').run()
+        try:
+            r.db_drop('bigchain_test').run()
+        except r.ReqlOpFailedError as e:
+            if e.message != 'Database `bigchain_test` does not exist.':
+                raise
+
         print('Finished deleting `bigchain_test`')
 
     request.addfinalizer(fin)
@@ -62,8 +65,12 @@ def setup_database(request):
 def cleanup_tables(request):
     def fin():
         get_conn().repl()
-        r.db('bigchain_test').table('bigchain').delete().run()
-        r.db('bigchain_test').table('backlog').delete().run()
+        try:
+            r.db('bigchain_test').table('bigchain').delete().run()
+            r.db('bigchain_test').table('backlog').delete().run()
+        except r.ReqlOpFailedError as e:
+            if e.message != 'Database `bigchain_test` does not exist.':
+                raise
 
     request.addfinalizer(fin)
 
diff --git a/tests/db/test_utils.py b/tests/db/test_utils.py
new file mode 100644
index 00000000..20f2942c
--- /dev/null
+++ b/tests/db/test_utils.py
@@ -0,0 +1,98 @@
+import builtins
+
+import pytest
+import rethinkdb as r
+
+import bigchaindb
+from bigchaindb.db import utils
+from .conftest import setup_database as _setup_database
+
+
+# Since we are testing database initialization and database drop,
+# we need to use the `setup_database` fixture on a function level
+@pytest.fixture(scope='function', autouse=True)
+def setup_database(request):
+    _setup_database(request)
+
+
+def test_init_creates_db_tables_and_indexes():
+    conn = utils.get_conn()
+    dbname = bigchaindb.config['database']['name']
+
+    # The db is set up by fixtures so we need to remove it
+    r.db_drop(dbname).run(conn)
+
+    utils.init()
+
+    assert r.db_list().contains(dbname).run(conn) == True
+
+    assert r.db(dbname).table_list().contains('backlog', 'bigchain').run(conn) == True
+
+    assert r.db(dbname).table('bigchain').index_list().contains(
+        'block_timestamp',
+        'block_number').run(conn) == True
+
+    assert r.db(dbname).table('backlog').index_list().contains(
+        'transaction_timestamp',
+        'assignee__transaction_timestamp').run(conn) == True
+
+
+def test_init_fails_if_db_exists():
+    dbname = bigchaindb.config['database']['name']
+
+    # The db is set up by fixtures
+    assert r.db_list().contains(dbname) == True
+
+    with pytest.raises(bigchaindb.exceptions.DatabaseAlreadyExists):
+        utils.init()
+
+
+def test_drop_interactively_drops_the_database_when_user_says_yes(monkeypatch):
+    conn = utils.get_conn()
+    dbname = bigchaindb.config['database']['name']
+
+    # The db is set up by fixtures
+    assert r.db_list().contains(dbname).run(conn) == True
+
+    monkeypatch.setattr(builtins, 'input', lambda x: 'y')
+    utils.drop()
+
+    assert r.db_list().contains(dbname).run(conn) == False
+
+
+def test_drop_programmatically_drops_the_database_when_assume_yes_is_true(monkeypatch):
+    conn = utils.get_conn()
+    dbname = bigchaindb.config['database']['name']
+
+    # The db is set up by fixtures
+    assert r.db_list().contains(dbname).run(conn) == True
+
+    utils.drop(assume_yes=True)
+
+    assert r.db_list().contains(dbname).run(conn) == False
+
+
+def test_drop_interactively_does_not_drop_the_database_when_user_says_no(monkeypatch):
+    conn = utils.get_conn()
+    dbname = bigchaindb.config['database']['name']
+
+    # The db is set up by fixtures
+    print(r.db_list().contains(dbname).run(conn))
+    assert r.db_list().contains(dbname).run(conn) == True
+
+    monkeypatch.setattr(builtins, 'input', lambda x: 'n')
+    utils.drop()
+
+    assert r.db_list().contains(dbname).run(conn) == True
+
+def test_drop_non_existent_db_raises_an_error():
+    conn = utils.get_conn()
+    dbname = bigchaindb.config['database']['name']
+
+    # The db is set up by fixtures
+    assert r.db_list().contains(dbname).run(conn) == True
+    utils.drop(assume_yes=True)
+
+    with pytest.raises(bigchaindb.exceptions.DatabaseDoesNotExist):
+        utils.drop(assume_yes=True)
+