As far as the shell scripts, those will automatically fail on any line with a simple command that has a non-zero status, since they inherit the set -e of the entrypoint, because they are sourced to give them access to the local variables, rather than run in another shell. For sql scripts, it looks like it might fail to fail with the &&, since that makes it no longer a "simple command" (see set -e docs).

Oh, I've missed the set -e at the beginning.
So to break on SQL script error the for loop can be just slightly modified, as below:

for f in /docker-entrypoint-initdb.d/*; do
    case "$f" in
        *.sh)  echo "$0: running $f"; . "$f" ;;
        *.sql) 
            echo "$0: running $f" 
            psql -v ON_ERROR_STOP=1 --username "$POSTGRES_USER" --dbname "$POSTGRES_DB" < "$f"
            echo 
            ;;
        *)     echo "$0: ignoring $f" ;;
    esac
    echo
done

Then -v ON_ERROR_STOP=1 is needed to psql return non-zero exit code (see docs).

👍 Seems solid to me! Thanks for working on this. Please make sure to follow the indentation of the file, which is tabs 😉.

Ok, I`ll make PR tomorrow.

Any way to make this new behavior optional? It was actually helpful in my case to ignore errors encountered when running sql files on startup.

Of course it can be parametrized by introducing for example IGNORE_SQL_ERRORS flag or so.

In your particular case you can run SQL scripts from *.sh files like shown in the docs:

For example, to add an additional user and database, add the following to /docker-entrypoint-initdb.d/init-user-db.sh:

#!/bin/bash
set -e

psql -v ON_ERROR_STOP=1 --username "$POSTGRES_USER" <<-EOSQL
   CREATE USER docker;
   CREATE DATABASE docker;
   GRANT ALL PRIVILEGES ON DATABASE docker TO docker;
EOSQL

but remove the -v ON_ERROR_STOP=1 switch.